Business taxes are an expense you can’t really get away from. However you set up your business, you’ll need to ensure you’re covering your tax obligations to federal, state, and local governments.
The type of taxes you pay as a small business in Georgia depends on your business structure, your industry, and other factors. An experienced business lawyer can help you understand all your options—and the tax ramifications of each—so you can get started with business organization and taxes correctly from the get-go.
Keep reading to discover some of the types of taxes small businesses in Georgia may have to pay.
Federal Business Income Taxes
Any business that generates an income must pay its dues to the IRS in the form of federal business taxes. The exact method by which taxes are paid to the federal government depends on how your business is set up.
A sole proprietor operating as a freelancer pays income tax as a self-employed individual. This includes an LLC with only one member (assuming the member has not requested a different tax classification, like making an election to be taxed under Subchapter S of the Internal Revenue Code as an S Corporation). Small businesses that have incorporated as a business corporation must file corporate income tax returns.
Partnerships, multi-member LLCs, and other business structures have their own tax requirements, so it can be a good idea to work with a professional to prepare your business taxes every year to ensure you’re filling out the right forms and paying the right amounts.
If you have full- or part-time employees, you likely have to handle withholdings. This is the amount you withhold from your employees’ paychecks to cover their income tax payments, including Medicare and Social Security taxes. You’ll also have to match some of that as the employer.
FICA taxes—the taxes used to cover Medicare and Social Security—are 15.3% of earnings. The employee pays 7.65% of that via withholdings while the employer pays the other 7.65%. You’ll need to make tax payments to cover this amount plus any other income tax amounts withheld from employees’ checks.
State Business Income Taxes
Most of the information about federal income taxes are true for state income taxes as well. Businesses in Georgia typically need to file state income tax forms or reports. Which reports you file and how to calculate the taxes you owe depend on the structure of your business.
Employers in Georgia also have to report withholdings for state income taxes from employees’ paychecks and remit those funds to the state.
Sales and Use Taxes
Businesses that collect sales and use tax, such as retailers, must remit those taxes to the state. You must complete sales and use tax reports and make the payment monthly or quarterly, depending on how long you have been registered and paying the taxes. In cases where the sales tax amount is very low, you may be able to pay it annually.
Some businesses that deal in specific types of goods may need to collect and pay excise taxes. Examples of such goods and services include motor fuel, fireworks, and certain tobacco and alcohol products. Each type of excise tax has its own rules.
For example, alcohol excise tax returns must be submitted by the 15th of each month while tobacco excise tax returns must be submitted by the 10th of each month.
Other Specialty Taxes
Businesses may need to pay taxes specific to their industries or services. For example, hotels and motels may be on the hook for state hotel-motel fees. Software companies and transportation services are among other types of businesses that may need to pay special state taxes.
Getting Help With Small Business Taxes in Georgia
As you can see, the list of potential taxes you might have to worry about if you start a business in Georgia isn’t short. That’s not to say the state doesn’t work to support a business-friendly environment. It’s consistently kept corporate income taxes fairly low, for example, and there are many other benefits to starting a business in the Peach State.
To enjoy those benefits, though, it’s important to get started with the right business structure and adhere to all the tax laws required. Working with a business law attorney who understands tax law, employment law, and other important legal topics relevant to your business can be a good idea.
Here are just a few of the ways a business law attorney can help:
- An experienced legal professional can help you choose the business structure that best supports your services, growth goals, and budget
- A lawyer can help you understand what tax obligations your business has so you can immediately plan to file the right returns and remit the taxes owed every year
- A business attorney can help you create contracts and other documents to support and protect your business as you grow
The business law attorneys at InPrime Legal can help you with all of these things and more. Our team has experience in applying for trademarks and patents, planning and implementing new business structures, handling breach of contract disputes, supporting clients through mergers and acquisitions, and creating and maintaining employee contracts.
If you want to start a new business, aren’t sure what step to take with a business legal matter, or need some legal advice about Georgia business taxes, start with us. Reach out to InPrime Legal today to schedule a consultation.