Are you looking to open a business, or maybe even already own a business, and want to know what taxes you’ll be responsible for throughout each year?
Here we have a guide of some of the most common taxes that businesses should keep on their radar. Please note that this list is not exhaustive of all taxes your business may be liable for, and it’s important to plan with your accountant when starting a new business to see what type of taxes you’ll need to pay.
These are the taxes that stem from having employees. Both the employer and employee are responsible for payroll taxes. For the employees, the employer withholds these taxes from their employee’s payroll and remits both the employee and employer portions to the US Treasury and any applicable states. These amounts are then reconciled when the quarterly forms are filled. The federal form is the Form 941, and NJ employers will also need to file the NJ-927 and WR-30. New York employers are responsible for filing the NYS-45. If you are on a payroll service (such as ADP, Paychex, etc.), they will automatically remit these payments and file the required forms on your behalf.
If you are required to remit sales tax from the sale of your products or services, you may need to make payments on either a monthly, quarterly, or annual basis. The frequency with which you must remit sales tax to the state depends on which state(s) your business operates in, and how much income the business collects in sales from each state. In New Jersey, the business is only required to make monthly deposits if it collected more than $30,000 in sales tax in the prior calendar year or more than $500 in the first and/or second month of each calendar quarter. For both monthly and quarterly payers, the NJ sales tax return is filed quarterly. The name of the return is the ST-50.
Partnership Filing Fee
Is your business registered as a partnership with the IRS? If so, the business might be responsible for paying the annual partnership filing fee. This is a federal tax of $150 per partner if the business has three or more partners. This is only applicable if your business files a 1065 Partnership tax return.
Corporation Business Tax (CBT)
The CBT is a tax that New Jersey S-Corporations are required to pay annually. The amount is determined by the company’s gross receipts in the current year. Quarterly estimates are required if the fee is $562.50 or higher. See the below chart for the NJ CBT rates for 2023:
|Less than $100,000
|$100,000 or more but less than $250,000
|$250,000 or more but less than $500,000
|$500,000 or more but less than $1,000,000
|$1,000,000 or more
Pass-Through Entity Tax (PTET)/Business Alternative Income Tax (BAIT)
The PTET/BAIT is available to passthrough entities, such as Partnerships and S-Corporations, in select states A passthrough entity is one where the business does not pay any taxes on the net profits, rather, the profits are passed through to owners and taxed on their individual income tax return. The PTET/BAIT is a state level tax, where the business pays a tax which is passed through to business owners as a credit on their personal tax return. The business gets a deduction on the federal level for taxes paid, while the business owners get a credit on their personal state income tax return for their share of the credit paid. This may sound “too good to be true,” but it was enacted as a work around to the federal cap on the deduction for state and local taxes. This is not available in all states, however, both New Jersey and New York have a pass-through entity tax that a business can opt into.
Should you have any concerns about what taxes your business is responsible for, do not hesitate to reach out to Eiger, Lang & Company. We strive to make your life less taxing!