Texas Legal Entities
Business Taxes
The type of business operated determines which taxes are necessary. In general, four types of taxes will apply: income tax, self-employment tax, employment taxes, and excise tax.
Income tax will be filed by all businesses except partnerships. Partnerships instead file an information return. Federal income tax must be paid throughout the year. The employees will typically have income taxes deducted from their paychecks.
Self-employment tax is a Medicare and Social Security tax which applies to individuals working for themselves. The payments contribute directly to your social security coverage. The coverage provides retirement benefits, survivor benefits, disability benefits, and hospital insurance benefits. In general, those who pay self-employment tax either have a net earning from self-employment that is greater than $400 or work for a church which is exempt from Social Security and Medicare taxation. There are special exemptions for aliens, government employees, foreign government or international employees, and fishing crew members.
If you have employees, you must pay certain taxes, including Social Security and Medicare taxes, the federal unemployment tax, and the federal income tax withholding.
Excise taxes may be required if you are a manufacturer, operate a particular kind of business, use various types of equipment, or receive payment for services. Form 720 is a quarterly return and includes environmental, communications, air transportation, fuel, retail of trucks, and manufacturer’s taxes.
If you have additional questions regarding business taxes, consult
Texas Legal Entities by calling 512-472-2431 today.
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