Taxes—Yep, You Gotta Deal With ‘Em

Alright, so you started a business. Maybe it’s a side hustle, maybe it’s your full-time gig, but either way, congrats! Now comes the part nobody wants to talk about—business taxes. You can ignore them… until the IRS starts sending those lovely “gentle reminders” (a.k.a. terrifying notices in bold font).

I learned this the hard way. My first year running a business, I figured I’d just “deal with taxes later.” Spoiler alert: Later came fast, and it came with penalties. If you’re reading this, let’s save you from that particular nightmare, shall we?

What Are Business Taxes, Really?

The Fancy Definition

“Business taxes” is just a professional-sounding way of saying “the government takes a cut of your earnings.” Every business, from your neighbor’s Etsy candle shop to Amazon, pays some form of tax. The type and amount depend on:

• How your business is structured (sole prop, LLC, corporation, etc.)
• Where you operate (because, of course, different states have different rules)
• What you sell (selling snacks? Excise tax. Selling software? Maybe no sales tax. Selling your soul to keep up with bookkeeping? Priceless.)

Why Should You Care?

Because skipping out on business taxes is not like forgetting to Venmo your friend for coffee. The IRS doesn’t do “chill.” You mess up, and they will fine you, garnish your wages, or, if you’re really wild with your tax evasion, send you to jail.

More realistically, though, knowing your taxes helps you:

• Avoid surprise tax bills that hit harder than your Monday morning espresso
• Find legal ways to lower your tax burden
• Keep your business in good standing (because nothing kills a business faster than a government shutdown—ask any restaurant that “forgot” sales tax).

The Tax Menu: What Businesses Have to Pay

1. Income Tax: The Classic

Your business makes money? The government wants a piece. How much you pay depends on whether you’re a sole proprietor, LLC, partnership, or corporation.

• Sole proprietors & LLCs: Report income on your personal tax return. So, yeah, your business and personal finances are like conjoined twins—inseparable.
• Corporations: Pay their own taxes separately. But if you own one, you probably already have an accountant (or a stress headache).

2. Self-Employment Tax: The Fun One

Remember when you had a 9-to-5, and your employer covered half your Social Security and Medicare taxes? Yeah, now that’s all on you. It’s 15.3% of your income. Ouch.

3. Employment Tax: If You Have Employees, Congrats—More Taxes!

If you’re paying other people, you have to withhold taxes from their paychecks. This includes:

• Social Security & Medicare
• Federal and state income tax (unless you’re in a magical no-income-tax state)
• Unemployment tax (yep, even if you think you’ll never fire anyone)

4. Sales Tax: The Sneaky One

If you sell physical products, your customers pay sales tax, but guess who has to collect it and send it to the state? Yep, you. And no, you can’t “forget” to send it in—state tax agencies are like that one aunt who always remembers your birthday but only so she can remind you about a debt you owe her from 2014.

5. Excise Tax: The “Sin Tax”

Selling fuel? Alcohol? Tobacco? The government charges extra taxes on certain goods and services. Why? Because they can.

6. Property Tax: If You Own, You Owe

Own an office or a warehouse? You’ll pay property tax. Even if your business is just your laptop and a dream, if you have a storefront, this applies to you.

7. Franchise Tax: The “Congrats, You Exist” Tax

Some states charge businesses just for existing. It’s called a franchise tax, and no, it has nothing to do with McDonald’s.

Filing Business Taxes Without Losing Your Mind

Step 1: Figure Out What You Owe

Before you even think about filing, make sure you know what taxes apply to you. Messing this up could mean underpaying (bad) or overpaying (also bad, but slightly less painful).

Step 2: Get an EIN (Employer Identification Number)

If your business is more than a one-person show, you need an EIN. It’s like a Social Security number but for your business. The IRS gives it to you for free (shocking, I know).

Step 3: Keep Good Records (No, Really)

You need solid records for tax deductions (more on that later). Keep track of:

• Income (obviously)
• Business expenses (because every receipt might save you money)
• Payroll records (if you have employees)

Bad at organizing? Get accounting software. Or hire someone who is.

Step 4: File the Right Forms

Different businesses file different tax forms. Don’t just guess—look it up or ask an accountant.

Step 5: Pay on Time (Seriously)

Miss a deadline, and you’ll pay penalties. Set calendar reminders. Tattoo the due date on your arm if you must. Just don’t be late.

Tax Deductions: AKA, How to Keep More of Your Money

Common Deductions That Save You Cash

• Office rent (yes, your coworking space counts)
• Internet & phone bills (because Zoom meetings aren’t free)
• Business meals (but only if it’s actually a business meal)
• Home office expenses (if you really use your home for business)
• Travel expenses (but no, your vacation doesn’t count)

Tax Credits: Even Better Than Deductions

Deductions lower your taxable income. Tax credits lower your actual tax bill. Some juicy ones:

• Small Business Health Care Credit (if you provide health insurance)
• R&D Tax Credit (for innovative businesses)
• Work Opportunity Tax Credit (if you hire from certain groups)

Avoiding the IRS’s Naughty List

Common Tax Mistakes to Dodge

• Not tracking expenses (if you can’t prove it, you can’t deduct it)
• Forgetting quarterly tax payments (self-employed folks, this means you)
• Misclassifying employees (independent contractor vs. employee matters)
• Ignoring state & local taxes (federal taxes aren’t the only ones)

Final Thoughts (Because Taxes Are Exhausting)

Look, I get it. Business taxes are about as fun as a dentist appointment that lasts four hours. But if you tackle them early, keep good records, and maybe—just maybe—get some professional help, you’ll survive.

Or, you could wing it and hope for the best. Just don’t call me when the IRS comes knocking.