Generally, the tax paid out depends on the form of business operation. Record keeping basically forms a basis for taxation. The tax law requires business to keep proper records explaining all the business transactions carried out as it operates. The following are the general types of business taxes:
Tax law requires that all business except partnerships to file an annual income tax. Partnerships usually file an information return. The form used purely depends on how the business is organized. The federal income tax states that you pay as you go; it means paying taxes as you earn or receive income during the financial year. It is calculated on assessable income less any allowable deductions. The assessable income refers to the income the business earns. It usually does not include Goods and Service Tax payable on sales made or on credits. The allowable deductions refer to certain expenses which are necessarily incurred in relation to the business.
A business is usually run by employees, and when you have employees, the employer has some certain employment tax responsibilities that he/she must pay and the relevant forms which are required to be filed. The common employment taxes include; social security and Medicare taxes, federal unemployment tax, and federal income tax withholding.
Value added tax (VAT)
This is a tax which is levied on consumer spending. It is collected via VAT-registration traders on their supplies of goods and services effected within the state for consideration to their customers. Each trader in the chain of supply through a retailer charges the tax on the sales and is also entitled to deduct from this amount the VAT paid on the purchases.
This is the tax which is charged on specific goods, or the tax on goods produced for sale which are particularly sold within a country or licensed for specific activities. It is considered as an indirect tax meaning that the seller or the producer who pays the tax to the government is expected to try to recover the tax paid by increasing the price at which the buyer gets the goods.
This is a type of tax which is charged on goods when they are transported across international borders. Custom duty helps authorities of a country to raise the state revenue and also protect their domestic industries from more efficient competitors from other countries. The custom duty is normally in a percentage form and is determined based on value of goods or upon the weight, dimensions, size, and some other criteria.
This is the tax charged on all the profits of business resident in a country, with some exceptions, and the non residents businesses that trade in the state through a branch of agency. The tax is charged on the company’s profits which usually include both chargeable gains and income. The business income for tax purposes is calculated based on the income tax rules and principles. The chargeable gains are calculated in accordance with the capital gains tax rules.