Things I Wish I Knew About Tax As A Business Owner
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Do you have any idea on what's going on with taxes?
Taxes on businesses aren't just about taxes on income. Just like regular people, businesses have to pay a variety of taxes. If you just started a business, you need to know what taxes you have to pay. #income
Here are taxes to know as a business owner;
A. Tax on income
Businesses have to pay taxes on their profits. This means that a business needs to pay taxes on its profits. How this tax is paid depends on how the business is set up. #tax
The owners of small businesses (sole proprietorships and LLCs with only one member) pay taxes on their small businesses on their personal tax returns. Companies only have to pay Company Income Tax (CIT) to the federal government.
B. Tax on Self-Employment
Self-employment tax is a type of tax that people who work for themselves usually have to pay. Partners and sole proprietors pay self-employment taxes based on how much money the business makes. Since business owners are not employees, these taxes cannot be taken out of their pay. Instead, they must pay self-employment tax.
The people who own an LLC also have to pay self-employment tax. Self-employment tax does not have to be paid by business owners who work as employees.
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C. VAT/Consumption Tax
FIRS require merchants to collect Value-Added Tax (VAT), and pay it to government. Some States also impose consumption tax on the sales of goods and services by hotels, payable to the State Internal Revenue Service.
In Nigeria, the average rate of sales tax added to the price of some goods and services is 5%.
D. Employment Taxes
When you have employees, you as the employer have to pay certain taxes and fill out certain forms.
In conclusion,
Most people don't understand their own tax returns, let alone the more complicated ones that businesses have to file. If you're not sure you can understand the rules, fill out your tax returns correctly, and figure out how much you owe, it's worth the cost and trouble to reach out to us today.
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