Don’t Forget - 7 Small Business Taxes

The end of the year is quickly approaching, which includes the holidays and tax season. 

Amid the chaos, you must ensure you have paid all of your requisite taxes for the year. So, here are 7 common taxes for business owners (especially real estate investors) that you do NOT want to forget to pay: 

  1. Self-Employment Tax - That rate is the sum of 12.4% for Social Security and 2.9% for Medicare. Self-employment tax applies to net earnings. For 2022, only the first $147,000 ($160,200 in 2023) of earnings is subject to the Social Security portion of self-employment tax. The remainder is only taxed at 2.9%
  2. Income Tax - The federal government taxes income in America, most state governments, and many local governments. The federal income tax system is progressive, so the rate of taxation increases as income increases. Marginal tax rates range from 10% to 37%.
  3. Corporate Income Tax - The United States imposes a tax on the profits of US-resident corporations at a rate of 21%. 
  4. Short-Term Capital Gains Tax - Short-term capital gains tax is a tax on profits from the sale of an asset held for one year or less. The short-term capital gains tax rate equals your ordinary income tax rate — your tax bracket.
  5. Long-Term Capital Gains Tax - Long-term capital gains tax is a tax on profits from the sale of an asset held for more than a year. The long-term capital gains tax rate is 0%, 15%, or 20%, depending on your taxable income and filing status. They are generally lower than short-term capital gains tax rates.
  6. Business Privilege Tax - The Alabama Business Privilege Tax is levied for the privilege of being organized under the laws of Alabama or doing business in Alabama (if organized under the laws of another state or country). The tax rate for the Alabama Business Privilege Tax is based on how much revenue your business brings to the state of Alabama. So, your rate will rise and fall depending on how much money your business earns each year. Alabama tax rates range from $0.25 to $1.75 for each $1000 of your entity’s Alabama net worth.
  7. Property Tax - Taxes are based on the property’s value, although actual millage rates apply to “assessed” value, which varies depending on the primary use of the property. 

Here is a FREE spreadsheet breakdown of these taxes that you can use to help yourself and your accounting team stay on top of your taxes every year. 

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