Small Business Tax Information

Learn about business taxes and incentives.

Business Taxes

As a business owner, it’s important to understand your federal, state, and local tax requirements. This will help you file your taxes accurately and make payments on time. The business structure you choose when starting a business will determine what taxes you’ll pay and how you pay them. 

Employer Identification Number (EIN) 

Most businesses need an Employer Identification Number (EIN). Your EIN is your federal tax ID number. You should get one right after you register your new business. 

Find out from the IRS if you need an EIN, how to get one, what to do if you've lost or misplaced yours, and more.

Income Tax

Most businesses must file and pay federal taxes on any income earned or received during the year. Partnerships, however, file an annual information return but don't pay income taxes. Instead, each partner reports their share of the partnership's profits or loss on their individual tax return. 

Almost every state imposes a business or corporate income tax. However, each state and locality has its own tax laws. Find out the business income tax requirements in your state or territory.

Employment Taxes 

If you have employees, there are federal tax requirements for what you must pay and the forms you have to file.These employment taxes include:

FUTA ensures that people can receive unemployment benefits after losing a job. 

Businesses in all states pay state workers’ compensation insurance and unemployment insurance taxes. 

Excise Tax

The federal government taxes businesses that manufacture or sell certain products. If your business uses various types of equipment, facilities, or other products, you may need to pay an excise tax. Learn about federal excise tax requirements and the forms you must file

Property Tax 

Each state has a different definition of what property is taxable. Some states collect property tax from businesses in commercial real estate locations. Others collect property tax for vehicles, computer equipment, and other business assets.  The amount of tax you pay is calculated by the total value of the property or on a certain percentage of the value. Search for property tax requirements in your state

Sales and Use Tax 

States may tax the sale of goods and services. Check whether your business has to register to pay and/or collect sales tax in your state. Exclusions in sales tax often include food, clothing, medicine, newspapers, and utilities. 

States may also tax your business on the use of goods and services when sales tax has not been collected. This typically applies to goods and services purchased outside of the state where you conduct business. 

Estimated Tax 

You must pay federal tax on income that is not subject to withholding. Or, if the amount of your federal income tax being withheld is not enough to cover the taxes you owe, you must pay an estimated tax. Find out if your business has to pay estimated taxes and the steps to follow

Self-Employment Tax 

If you have your own business, you must pay Social Security and Medicare taxes. Otherwise, you won't be covered under the Social Security system. Learn about who must pay self-employment tax and how to pay it.

Estimated Taxes

Estimated tax is the method used to pay taxes on income that is not subject to withholding. This includes income from self-employment, interest, and dividends. You may also have to pay estimated tax if the amount of income tax being withheld from your salary, pension, or other income is not enough. 

Who Has to Pay Estimated Taxes?

Individuals who run their own business typically have to make estimated tax payments. If you don't pay enough income tax through withholding or estimated taxes, you may be charged a penalty

Find out if you have to make estimated tax payments and how to pay.

When Are Estimated Taxes Due?

The year is divided into four periods to pay estimated tax. Each period has a specific payment deadline.

These are the 2020 Estimated Federal Tax due dates:

  • April 15

  • June 15

  • Sept. 15

  • Jan. 15 of the next year

Energy Tax Incentives

Energy-related tax incentives can make home and business energy improvements more affordable. There are credits for buying energy efficient appliances and for making energy-saving improvements.

Find out if you qualify for state, local, utility, or federal incentives.

Energy Tax Breaks by State

Federal Energy Tax Breaks

Energy-Saving Home Improvements

Residential Energy Credits allow savings for any of these purchases for your home:

  • Solar panels

  • Solar water heaters

  • Wind turbines

  • Geothermal heat pumps

  • Fuel-cell equipment

These tax credits are valid through 2021. 

New Energy Tax Breaks for 2018 - 2020

A new law passed in December 2019 reauthorized many energy tax breaks that had expired in 2017. They're now retroactive to 2018 and extended through 2020 or longer. They include credits for:

  • Energy efficient homes

  • Energy-efficient commercial buildings

  • Nonbusiness energy property

  • Qualified fuel cell vehicles

  • Alternative fuel vehicle refueling property

  • Energy tax incentives for biodiesel and renewable diesel, extended through 2022

Tax Relief in Disaster Situations

The Internal Revenue Service (IRS) offers special tax help for individuals and businesses recovering from a major disaster or emergency.

Get Your Refund Faster

In a federally-declared disaster area, you can get a faster refund by filing an amended return. You will need to claim the disaster-related losses on your tax return for the previous year.

Get guidance from the IRS on amending a tax return or filing an extension after a disaster

Tax Relief for Wildfires and Hurricanes

Learn about tax relief for victims of the California wildfires and for hurricanes 

Tax Relief for Earthquakes

Federal Tax Deductions for Small Business Charitable Donations

Small businesses can receive a tax deduction for making charitable donation. The IRS has specific reporting requirements when a small business donates:  

  • Non-food inventory 
  • Food
  • Intellectual property 

You won't receive a tax deduction for donating services. But you may be able to deduct expenses related to the donation, like travel or materials.

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Last Updated: June 16, 2020

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