Here are the Top 10 Tax Questions people ask when starting a business. You’ll also find a bonus section for E-Commerce Sellers below! Thank you Angie Ortega, founder and CEO at https://nubustax.com/ for providing this handy information!
Top 10 Tax Questions
1. When are Federal and State Income Taxes Due?
Partnership (Multi-Member LLC) and S-Corporations are due by March 15th. Single member LLC’s and Corporations are due by April 15th.
2. What kind of Taxes do I have to submit and pay?
In the USA we have Federal Income Taxes, State Income Taxes, Sales & Use Tax, County, and school district taxes.
3. As a Non-US Resident with a registered LLC, do I have to pay Federal Income Tax?
This will depend on the following: Tax Treaty, Type of business venture, Physical Presence, any employees, Effective Connective Income, and much more. Just because you are a foreigner, does not mean that you are exempt from paying taxes in the USA.
4. When do I have to file form 5472?
It’s due by April 15th. I highly recommend that you file this form early in the tax season, because this particular form if not filed on time can cost you $10K or just on late filing fees.
5. Do I have to pay State income taxes?
This will depend on the State that you registered your company. If you registered your company in the following States, then you don’t have to pay State Income Taxes. Alaska, Florida, Nevada, South Dakota, Texas, Washington, Wyoming, Tennessee, and New Hampshire.
6. What expenses can I claim in my tax return?
Below is an example of some of the expenses that can be claimed.
- Cost of good sold – This is inventory, labor, and shipping costs associated with the inventory.
- Employees – This can be W2 or Contractors (1099-misc)
- Commission and Fees
- Insurance – Car Insurance, Workers Comp Insurance, Health Insurance,
- Legal and Professional Fees – Attorney and Accountants
- Office Expenses
- Rent/ Leases – Storage fees
- Taxes and Licenses
- Travel – Business purposes
- Utilities – office or home office
7. Do I need an ITIN?
Yes, if you are non resident of the USA and don’t have a valid social security number. You will need it to file your taxes and possibly to open a US Bank Account.
8. Do I need a US Bank Account?
Yes, once you register a business in the USA, you will need to open a US Business Checking Account. The checking account will be beneficial to collect your earning and pay for expenses. You will also be required to have a proper accounting in place in order to comply with IRS and taxes.
9. If I hire employees, when are those taxes due?
Payroll taxes are much more complex. This will depend on the State that you will be contracting your employees. The payment schedule can be Monthly, Biweekly, or quarterly. The filing of tax returns Form 941 and State are due at the end of every January, April, July, and October.
10. What about contractors?
If they are US Based contractors such as a company or individual, you will need to sign an agreement of the services that will be rendered and obtain a W9 Form. You will have to provide a 1099-Misc to the individual or company. The deadline to submit is January 31st.
Bonus: E-Commerce Sellers
1. When are Sales & Use tax due?
The payment schedule can be Monthly or quarterly. The Tax return will be eiter Monthly, Quarterly or Yearly depending on the amount of sales and the rules of each State that you have a nexus.
2. Do I have to collect Sales Tax?
This will depend on the platform that you sell in. For example;
Amazon FBA – Amazon will collect and remit in most States the Sales & Use Tax. They might still require that you register with the States that they have a warehouse in. Currently the States that they don’t collect in and that will be your responsibility are Montana, New Hampshire, Florida, Texas, and Oregon.
Fullfilled by Merchant, then yes. You will collect when you meet the Economic or Physical Presence Nexus. For the exemption of North Carolina. Once you start selling in that State, you will have to register, collect, and remit taxes.
3. When do I need a reseller certificate?
This will depend on where you buy or obtain your product. For example, if you have a US Vendor/ Wholesaler, they will ask for the reseller certificate in order for them not to charge you the sales tax up front, since you will be reselling the product to your customer.