If you’re a new entrepreneur starting your own business, you may either forget about or find yourself wondering what taxes you need to be aware of.
That’s why it’s a good idea to work with a tax professional. Tax professionals are experts in tax law and can help you understand tax liabilities and compliance requirements. They can also help you file your returns correctly, which is especially useful if you’re unfamiliar with the tax laws or the filing process.
As a sole proprietor, you’ll be responsible for filing a variety of taxes, including self-employment estimated taxes, state and local income taxes, and, if you have employees, you will need to pay payroll taxes. If you sell a product (including digital products), there may be a state and local sales tax. It’s important to note that failure to file or pay taxes can result in hefty fines and penalties, so it’s important to take the time to understand what taxes you need to be aware of as a sole proprietor.
I've seen cases where the business owner was using software and thought the software was remitting taxes. Because the business owner never balanced their checkbook, this mistake was not caught until it was too late and the penalties were assessed. Both sales and payroll taxes are trust fund taxes. Trust fund taxes carry a much higher penalty for non-payment than regular income taxes, because the money was never yours. Sales tax is collected at the transaction level and is separate from the sale. Payroll taxes belong to your employees.
Contact us today so you can continue doing what you do best: running your business! We will take care of keeping you in compliance.