Launching a business can be an exciting mixture of securing seed funding, working long hours, and, finally, a grand opening. With that debut comes several new, important regulations to follow. Whether you’re in the planning stage or are preparing to expand, here are some key tax education rules to keep in mind.

4 Important Tax Education Rules for New Businesses

1. Estimated Tax Payments Are Due

The IRS requires businesses to make estimated tax payments each quarter. This is especially true for self-employed individuals and independent contractors. The tax is typically a percentage of the earnings for each quarter. Failure to send in these payments every three months could result in penalties and fines for underpayments.

2. Self-Employment Taxes Kick In

Another key tax education change is the addition of a self-employment tax. The new levy covers Medicare and Social Security contributions. Depending on the business’s net earnings and income, the tax percentage will vary. There a few exceptions to avoid paying the tax. If your business is officially listed as a corporation, you won’t be subject to self-employment taxes.

3. Filing Status May Change

A new business can also trigger a new filing status. Self-employed individuals are required to file a tax return if their net business income exceeds $400. If the business owner is under the age of 65 and single, they won’t have to file a return if the adjusted gross income is less than $10,400. In this case, the amounts vary each year, so consult with a professional tax education advisor to get the most current thresholds.

4. Profits Are Taxable

Any profits earned by a business are subject to be taxed. The IRS rule applies even if the owner withdraws the profit or puts it back into their firm for expansion purposes. Fortunately, there are a number of business expenses that can be deducted on the income tax return to make up for those taxed profits.

With a new business comes new tax responsibilities. The good news is you don’t have to go it alone to stay in compliance. The office of Linda M. Shiraiwa CPA, PS in Gig Harbor, WA, specializes in helping small businesses with their tax returns. She provides a personalized touch with all of her clients with an emphasis on clear, current, and compliant tax education information on following federal, state, and local regulations. If you need assistance with your firm’s tax filings, call (253) 858-6030 to schedule a friendly consultation. Visit the website for a complete listing of services for entrepreneurs.