Business Income Taxes
Own a small business? How you pay taxes on the profits you make depends on how your business is set up.
If your business is a C corporation, your company’s income tax rate is a flat 21% thanks to the Tax Cuts and Jobs Act of 2018 (it was 35% before that bill passed).
But if the business is a pass-through entity, such as a sole proprietorship, a limited liability company (LLC), or an “S” Corporation, you won’t pay corporate income taxes. The profits from your business “pass-through” the business to you. So, you would fill out your personal tax return like you normally would and pay the taxes on those profits at your personal income tax rate.
Local Income Taxes
Although most U.S. cities and counties don’t add another layer of income tax on their residents, there are still nearly 5,000 local jurisdictions across 17 states—particularly in the Midwest and Northeast—that charge an income tax as of 2019.
These local income taxes are mostly imposed by counties, municipalities, and school districts to pay for a wide range of civic services like parks, schools and even garbage collection.
Get Your Taxes Done Right
If you live in a state with no income tax, have a simple tax situation, or just happen to be one of those unique individuals who like using tax software, that’s great!
But hey, depending on where you live, you might have to deal with federal, state, and local taxes . . . that’s a lot!
If you’re feeling overwhelmed this tax season, work with Superior Bookkeeping and Taxes. That way, you can rest easy knowing you have a tax professional on your side to help you get your taxes done right.