Taxes: Income, Payroll And Sales – Coursework Example
Taxes, Income and Payrolls al Affiliation) Federal Tax Forms used for the Following dimensions of Business Entities Sole Proprietorship business entities may be liable for the following forms of taxes; self-employed tax, income tax, excise tax, estimated taxes such as, depositing employment taxes, Federal unemployment taxes, income tax withholding as well as estimated tax. On the other hand, business partnerships are subjected to Federal withholding tax. In addition, single member Limited Liability Companies usually applies the employment tax and the excise tax. Multimember LLC, just like Single member LLC’s, file for employment and excise taxes. Moreover, C and S corporation companies have their own unique dimension of filing taxes, which are; estimated taxes, employment tax, income tax as well as excise tax (Carlistons, 2011).
Reasons why LLC’s pay Employment and Excise Tax
According to the IRS, an LLC is a business form created by an existing statute: In accordance to the number of members that make an LLC and number of elections held, the IRS will consider an LLC as a partnership, corporation or even part of the tax returns of the owner, hence filing for an employment and some forms of excise taxes.
Primary Difference between an S Corporation and a C Corporation
One of the differences between an S corporation and a C corporation occurs on their levels of taxation: An S Corporation has one level of taxation while a C corporation is usually subjected to double taxation, which occurs at the shareholders level during the process of profit distribution and another at the Corporate Level on its net income. Another difference between an S and a C corporation is that S corporations are subject to various limitations i.e. the number of shareholders it can have, while C corporations have a greater dimension of tax planning, accompanied by flexibility and can protect their members from liabilities created by direct taxes.
Business Expense According to the IRS
According to the IRS, a business expense can be considered necessary or ordinary. The IRS asserts that an expense considered ordinary is common among many industries, while the necessary expense is usually appropriate and assists the businesses. Business entities are usually allowed to deduct such expenses from the years or periods of operation they have incurred them. The commonly allowed business expenses are; insurance expenses, taxes, rent, interest, employees’ pay and retirement plans.
IRS Publication on Estimated Taxes and Withholding Taxes
According to the IRS, if a person does not pay his/her taxes by withholding or does not pay enough taxes, he/she may be subjected to estimates tax. The IRS describes tax withholding as the process through, which an employer withholds an income tax from his employees pay.
A trust tax is basically the taxes charged on a third party that holds assets on behalf of his beneficiary, following certain fiduciary arrangements. Types of trust taxes are; mixes trust taxes, bare trust taxes and discretionary trust taxes.
Amount of Tax Withheld
The amount of taxes withheld depends on various issues; however, the IRS provides the W-4 form that allows you to specify whether you want your taxes withheld and the amount usually depends on the types of allowances provided by an employer.
Carlistons, L. (2011). IRS valuation guide for income, estate and gift taxes: IRS Appeals Officer Valuation Training Program.. Chicago, Ill.: [Commerce Clearing House].