Types of Federal Taxes

  • The Internal Revenue Service (IRS) collects Income Tax from all business types, although the type of income tax return varies by business type. The federal income tax is meant to be paid throughout the year.
  • If you do not pay the Income Tax through withholding, or do not pay enough, you may be asked to pay an Estimated Tax to make up the difference.
  • Employment Taxes cover social security and Medicare taxes as well as additional withholding and unemployment taxes for employees.
  • The Self-Employment Tax covers social security and Medicare taxes for people who work for themselves.
  • Excise taxes are paid on certain business operations, including communications and air transportation; retail sale of heavy trucks, trailers, and tractors; accepting wagers of conducting a wagering pool or lottery; and more.

Visit the IRS website for full details about each type of business tax.

Note
You need an Employer Identification Number (EIN) in order to collect and pay federal taxes. If you are a sole proprietor, this may be your social security number. You may apply for an EIN through the Internal Revenue Service (IRS).


Tax by Business Type

Sole Proprietorship

Sole proprietors report all business income and losses on their personal income tax return. They also must pay self-employment taxes which are contributions to Social Security and Medicare, the estimated tax for individuals, and excise taxes on certain items.
Filing Requirements from the IRS

Partnerships

As with State taxes, partners pay taxes on their business income through their personal Federal income returns. However, partnerships may still be subject to employer and excise taxes.
Filing Requirements from the IRS

Limited Liability Company (LLC)

The IRS taxes multi-member LLCs in the same way as partnerships. Single-member LLCs are treated at sole proprietors.
Filing Requirements from the IRS

C-Corporation

Corporations are taxed on earnings as well as dividends to shareholders. They will also pay employment taxes and excise taxes on certain goods.
Filing Requirements from the IRS

S-Corporations

Like LLCs, S-Corps are taxed in the same way as partnerships where members pay taxes on their earnings through their personal Federal returns.
Filing Requirements from the IRS

*Rates and regulations are subject to change without notice. Please refer to the IRS for the most up-to-date rates and regulations.

Last modified date: Thu, 04/07/2016 - 16:17