As a new business owner, you have a lot to learn. You have to hire employees, figure out the best marketing tactics, and of course, handle your accounting. That last item can be a bit tricky, and if you’re new to small business accounting, you may wonder what type of taxes you need to pay. The exact taxes vary based on your business, but here’s an overview of the nine most common small business taxes.
- Personal Income Tax
- Payroll Tax
- Fringe Benefits Tax
- Goods and Service Tax
- Excise Tax
- Custom Tax or Duty
- Corporate Income Tax
- Dividend Distribution Tax
- Capital Gains Tax
If you run your business as a sole proprietorship, you generally pay personal income tax on the money you earn. As you expand and hire people, you have to withhold personal income tax from their pay as well as contributions for social security and insurance. That is called payroll or withholding tax. Additionally, if you decide to offer special benefits such as car allowances or retirement plans, you may have to pay fringe benefit tax on those amounts.
Once your aggregate turnover reaches a certain level, you have to pay GST on most goods and services that you sell. The rate varies depending on the good or service, and to be on the safe side, you may want to invest in a GST-ready accounting software such as QuickBooks Online. That has all the applicable GST rates and can do the calculations for you. On certain goods, you may also have to pay excise tax, and if you import goods, you may face customs tax as well.
Eventually, if you decide to incorporate your business, your business profits are no longer personal income. Instead, they become corporate income, and your business faces corporate income tax on those amounts. Additionally, if your business turns a profit selling significant assets, you may have to pay capital gains tax, and finally, if your business distributes dividends, there is a distribution tax on that.
To get help determining which taxes apply to you, you may want to consult with an accountant. They can help you calculate your taxes and give you tips on filing tax returns.