Apart from federal taxes, companies and individuals who hire domestic employees are liable for other taxes such as Federal Insurance Contributions Act (FICA), Federal Unemployment Tax Act (FUTA) and state or local taxes. Here are some of them 

FICA Taxes

Federal Insurance Contributions Act, or FICA, taxes. FICA is the withholding of Social Security and Medicare taxes by a company from its employees’ wages and subsequent payment to the IRS during the year. 

Even if the payroll is for a single worker, the person responsible for keeping track of payments and withholdings is personally liable if FICA taxes are not paid, so it is not a tax to be taken lightly. We recommend contracting the Payroll service to specialists in the area. 

FUTA Taxes

Federal Unemployment Tax Act, FUTA tax. Your company may be required to pay FUTA, the money collected funds unemployment programs for people who are not working. The withholding is not made from employees’ wages, the rate to be paid will depend on the amount of wages paid during the year.

Excise tax

A tax paid by consumers of certain specific items, such as gasoline, cigarettes or alcohol. Generally, this amount is added to the final price of the product and then the tax payments are distributed to local, state and federal governments.

Self-employment tax

The self-employment tax is composed of the employee’s and employer’s portions of Social Security and Medicare taxes. In the case of working for a company, the employer would pay half and the employee would pay the other half. However, when owning your own business, whether it is a sole proprietorship, partnership or LLC structure, you must pay both halves.

State and local taxes

Depending on the state where the business is registered and operates, state and local tax filing obligations and requirements vary.

The IRS maintains a list with links to the websites of various states, divided by what you need to know about running a business and paying taxes in a given state.

State and local taxes may include some tax liabilities such as:

Real estate tax: local tax that applies in case the company owns any land or building.

Business property tax: Tax liability on business assets, such as equipment and furniture.Franchise tax: Annual or semi-annual tax levied by some states on businesses doing business in their state. Even if you do not have a physical structure such as a store or warehouse, you may need to pay if you sell products in that state.

There are other tax obligations specific to each category or industry, so we recommend consulting with an accountant specialized in business taxes, beyond recommending which deductions you can present in your tax return to reduce the final amount to be paid, could become a guide that will help you know what your tax obligations are as a business owner and avoid committing a tax offense that may harm your performance as an entrepreneur.

Do you need help for your tax return? Contact us, you can do it via Whatsapp, email [email protected] or phone call (+1) 786-5770191. Or if you want, you can contact us through our website (here)