As a business owner, you have lots of responsibilities. One of the most important ones is paying and reporting taxes. If you aren't diligent about this, you could be faced with penalties and interest fees. In this blog post, we'll go over some of the most common taxes and reports for small businesses on a federal, state, and city level.
Federal Business Taxes
Here are some of the taxes you may need to pay and report to the IRS, not including individual or corporate tax returns.
Estimated Tax Payments
As a self-employed individual, you will most likely need to make quarterly estimated tax payments. These payments account for your federal income tax, Social Security, and Medicare since you aren't having it withheld from a paycheck. Sole proprietors, partners, and S corporation shareholders must file an IRS Form 1040-ES while corporations file an IRS Form 1120-W.
These payments are typically paid in four payments and reported throughout the year with the following deadlines for each quarter:
Q1: April 15
Q2: June 15
Q3: September 15
Q4: January 15
If the due date falls on the weekend or a legal holiday, the due date is delayed until the next business day.
Employer's Annual Federal Unemployment (FUTA) Tax
Generally, if you have employees, you must pay unemployment taxes, also known as FUTA tax. As an employer, you will pay FUTA tax on the first $7,000 paid to each employee. Depending on how much you owe, you will need to make payments quarterly or annually.
Annual payments are due on January 31 while quarterly payments are due on the last day of the month following the end of the quarter.
Q1: April 30
Q2: July 31
Q3: October 31
Q4: January 31
You will report this FUTA annually by filing Form 940.
General deadline: January 31
If you deposited all quarterly FUTA tax when due: February 1
If the due date falls on the weekend or a legal holiday, the due date is delayed until the next business day.
Employment Taxes
Most employers need to withhold and remit employment taxes, which include federal income tax, Social Security, and Medicare, for each employee. Tax payments should be deposited monthly or semi-weekly. To report taxes, you will either need to file IRS Form 941 quarterly or IRS Form 944 annually. Your filing frequently is dependent on your annual employment tax liability, but most businesses will need to file quarterly. You must have approval from the IRS to file annually.
Form 944 is due on January 31 while Form 941 is generally due by the last day of the month following the end of the quarter.
Q1: April 30
Q2: July 31
Q3: October 31
Q4: January 31
If the due date falls on the weekend or a legal holiday, the due date is delayed until the next business day.
Washington State Business Taxes
Combined Excise Tax (DOR)
As a business in Washington, you must report business income, sales tax, and use tax using an Excise Tax Return. When you register your business with the Department of Revenue, you will receive a packet of information that includes your filing frequency (monthly, quarterly, or annually). This is based on your estimated annual business income. Here are the due dates depending on your filing frequency:
Monthly: 25th of the following month
Quarterly: End of the month following the close of the quarter
Q1: April 30
Q2: July 31
Q3: October 31
Q4: January 31
Annually: April 15th
If the due date falls on the weekend or a legal holiday, the due date is delayed until the next business day.
State Unemployment Insurance (SUI) (ESD)
In addition to the federal unemployment tax, you must pay unemployment tax on a state level in Washington. Tax will be remitted and reported to the Employment Security Department on a quarterly basis by the last day of the month following the close of a quarter.
Q1: April 30
Q2: July 31
Q3: October 31
Q4: January 31
If the due date falls on the weekend or a legal holiday, the due date is delayed until the next business day.
Workers' Compensation
Employers and employees are covered for the financial impact of work-related injuries and disease by workers' compensation. This program is administered by the Washington State Department of Labor & Industries (L&I) and must be paid and reported on the last day of the month following the end of the quarter.
Q1: April 30
Q2: July 31
Q3: October 31
Q4: January 31
If the due date falls on the weekend or a legal holiday, the due date is delayed until the next business day.
Paid Family & Medical Leave
In Washington, paid time off for family and medical leave is funded through premiums paid by employers and employees.
Q1: April 30
Q2: July 31
Q3: October 31
Q4: January 31
The due date is not delayed if the due date falls on the weekend or a legal holiday. It must still be paid and reported by the due date.
WA Cares Fund
A new long-term care fund, known as the WA Cares Fund, will be implemented and employers will need to collect and report premiums from employees. Premiums will be collected and reported quarterly in the same system as Paid Family & Medical Leave. The due dates also remain the same:
Q1: April 30
Q2: July 31
Q3: October 31
Q4: January 31
The due date is not delayed if the due date falls on the weekend or a legal holiday. It must still be paid and reported by the due date.
City of Bellingham Business Taxes
City of Bellingham B&O Tax
Businesses in the City of Bellingham must pay B&O taxes to fund a variety of city departments such as police, fire, parks, and libraries. Taxes and reports may be due annually, quarterly, or monthly.
Monthly: The last day of the following month
Quarterly: End of the month following the close of the quarter
Q1: April 30
Q2: July 31
Q3: October 31
Q4: January 31
Annually: April 15th
The due date is not delayed if the due date falls on the weekend or a legal holiday. It must still be postmarked, filed online, or returned to the Finance office by the due date.
Stay on Top of Your Deadlines
Here is a brief overview of the taxes and reports that we mentioned in this post and a link to information about each of them on their respective collecting agency's website:
Remembering deadlines and ensuring you're paying the correct amount of tax can be difficult to juggle. Luckily, when you become a bookkeeping client of ours, we can file and report taxes for you, taking one more thing off your plate. Give us a call at (360) 756-5020 to see if Summit Bookkeeping is the right fit for your business.
Disclaimer: This post is meant for informational purposes only and should not be taken as legal, business, or tax advice. Please consult with your accountant or bookkeeper for more information based on your specific situation. For more information, please read through the following resources in the table above.