How Often Does a Business Pay Taxes and What You Need to Know

As a business owner, you're likely no stranger to the idea of paying taxes. However, the frequency and specifics of tax payments can be confusing, especially for new entrepreneurs.

Businesses typically pay taxes on a quarterly basis, with four tax periods per year: January 15th for the December quarter, April 15th for the March quarter, June 15th for the May quarter, and September 15th for the June quarter.

You'll need to file a quarterly tax return, also known as a Form 941, to report your tax payments. This form is usually due by the 15th day of the month following the end of the quarter.

Don't worry if you're unsure about the tax payment schedule - it's not uncommon for business owners to feel overwhelmed by tax-related tasks.

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C corporations have paid federal income taxes at a flat rate of 21% since 2018. Prior to 2018, C-corps paid taxes on a tiered structure, with rates ranging from 15% to 35%.

The corporate alternative minimum tax (AMT) went into effect in 2023, with a 15% minimum tax for corporations. However, this tax applies only to corporations with average adjusted financial statement income over $1 billion.

Pass-through entities, such as S corporations and LLCs, don't pay federal income taxes directly. Instead, business income and losses pass through to the owners and members, who pay taxes on business profits via their individual income tax returns.

The federal income tax brackets for the 2024 tax year are used to tax business income from pass-through entities. These brackets are the same as those for ordinary income, such as wages from a job or interest earned from a savings account.

Self-employed individuals pay estimated taxes every quarter, which include two categories: self-employment tax (Social Security and Medicare) and income tax on business profits. The self-employment tax rate on net income up to $168,600 is 15.3%, with 12.4% going to Social Security tax and 2.9% to Medicare tax.

Here's a breakdown of the self-employment tax rates:

Corporations must make estimated tax payments on the 15th day of the fourth, sixth, ninth, and 12th month of their fiscal years. This is the same for pass-through business owners who use a calendar year.

You can file small business taxes a bit differently depending on your business structure. The main structures are sole proprietors, partnerships, S-corps, and corporations. Each type of business has its own unique tax filing requirements.

Estimated tax payments are due April 15, June 15, September 15, and January 15 of the following year. If any of these dates fall on a weekend or legal holiday, the due date moves to the following business day.

Here's a quick breakdown of the payment due dates for small businesses:

You can submit payments online through the Electronic Federal Tax Payment System or use paper forms supplied by the IRS.

Corporations must make estimated tax payments on the 15th day of the fourth, sixth, ninth, and 12th month of their fiscal years. This is a crucial deadline to keep in mind, especially if you're using a calendar year.

Payment due dates are sometimes referred to as deposit dates, and with businesses, payments are frequently due in advance of filing dates. This means you'll need to set aside money for taxes well in advance of the actual filing deadline.

Partnerships have a tax deadline of April 15th for filing their tax returns in 2024. This is the same deadline as traditional corporations, or C-corporations, which must file their tax returns using Form 1120.

If you're self-employed, you're required to file quarterly tax payments to the IRS throughout the year. These payments are due on April 15, June 15, September 15, and January 15.

Traditional corporations, or C-corporations, must file their tax returns by April 15th. This applies to corporations that operate on a calendar year basis.

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Corporations and pass-through business owners must make estimated tax payments on specific dates, including the 15th day of the fourth, sixth, ninth, and 12th month of their fiscal years.

The IRS requires owners of pass-through businesses to make estimated tax payments, which are generally due on April 15, June 15, September 15, and January 15 of the following year. If any of those dates fall on a weekend or legal holiday, the due date moves to the following business day.

Some businesses use payroll, accounting, or tax preparation software to estimate their tax liability and send payments to the IRS on their behalf. Just make sure to regularly set money aside for taxes so it's available when payments are due.

The way you file taxes depends on your business structure, which can be a corporation, partnership, sole proprietorship, or S corporation. Each type of business files taxes a bit differently, so you'll need to find the right forms for your business.

Many tax returns can now be filed online, which is referred to as e-filing. In some cases, e-filing can result in faster refund processing when you're owed back a portion of the payments you previously made.

Expand your knowledge: Taxes on Sale of Business S Corp

Partnerships file Form 1065, which provides an overview of the company's profits and losses for the year.

Each individual member of the partnership will receive a Schedule K-1, showing their share of the profits and losses for the year. This is where each partner actually reports and pays taxes on their share of income from the business.

The tax deadline for partnerships is April 15th for filing their tax returns in 2024.

Partnerships must also provide each partner with a Schedule K-1, outlining each share of the partnership's income, deductions, and credits.

Here's a quick breakdown of the key dates for partnerships:

To ensure accurate tax reporting, partnerships should keep accurate records of income, deductions, and credits throughout the year.

Payroll and employment taxes can be a complex and time-consuming aspect of running a business. Employers are responsible for withholding and paying various taxes, including FICA and FUTA taxes.

The FICA tax rate is 15.3% of an employee's gross wages, with employers withholding half and paying the remainder. For federal unemployment taxes, employers pay 6% of the first $7,000 paid to each employee per year, but can qualify for a tax credit of up to 5.4%.

Businesses with employees must also file Form 941 quarterly for federal income and other payroll taxes withheld from employee paychecks. The due dates for filing and paying these taxes are April 30, July 31, October 31, and January 31.

Here's a breakdown of the typical deadlines for employment taxes based on payroll frequency:

As an employer, you're responsible for managing a variety of payroll-related taxes, including FUTA, FICA, and collecting employee income tax. You'll also need to consider state and local taxes, which vary depending on your location.

Employers are required to calculate federal payroll tax withholding using IRS Publication 15. This ensures you're withholding the correct amount of taxes from employee wages.

For businesses with employees, the IRS requires Form 941 to be filed quarterly for federal income and other payroll taxes. The due dates for filing and paying these taxes are April 30, July 31, October 31, and January 31, with adjustments made for weekends and observed holidays.

Broaden your view: Payroll Taxes

You can calculate the FICA tax rate for your employees by adding 12.4% for Social Security and 2.9% for Medicare, totaling 15.3% of their gross wages. Employers withhold half of this rate, while paying the remainder out of their own pocket.

Employers also pay federal unemployment taxes, which are 6% of the first $7,000 paid to each employee per year. However, you may qualify for a tax credit of up to 5.4%, reducing your FUTA tax rate to as low as 0.6%.

Businesses with employees should consider the frequency of pay periods when managing payroll taxes. For bi-weekly payrolls, deadlines for employment taxes typically fall shortly after each pay period, while monthly salary payrolls have monthly deadlines. Weekly payrolls, on the other hand, require more frequent submissions to the IRS.

Sales can be a complex aspect of running a small business, especially when it comes to sales tax. Forty-five states, the District of Columbia, and many localities levy a sales tax.

You'll need to navigate each state and local taxing authority's rules, exemptions, and tax rates, which can be confusing. Working with an accountant is a good idea, especially if you sell products or services to out-of-state customers.

You may need to register, collect, and remit sales taxes in more than one state or local jurisdiction. Even if you're an ecommerce store without a physical presence in any state, you're still on the hook for sales tax.

Depending on the state, you might have to file a sales tax return monthly, quarterly, or annually. To better understand your obligations and how sales tax works, take a look at a sales tax overview.

As a business owner, it's essential to understand that state taxes can add up quickly. Business owners are subject to taxes in states where they do business.

Most states have a corporate income tax, with 44 states levying a tax as of 2024. The rates can vary significantly, ranging from 2.5% in North Carolina to 9.8% in Minnesota.

Pass-through businesses in states with a state income tax on individuals also pay taxes on their share of business profits. This means owners of these businesses will report their business income on their state income tax returns.

Top marginal tax rates in individual income taxes range from 2.5% in Arizona and North Dakota to 13.3% in California.

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Businesses have various tax deadlines to keep track of.

Partnerships have a tax deadline of April 15th for filing their tax returns in 2024, just like individuals. They also need to provide each partner with a Schedule K-1, which outlines each share of the partnership's income, deductions, and credits.

For traditional corporations, or C-corporations, filing their tax returns using Form 1120 is due by April 15th, if they operate on a calendar year basis.

Many small businesses are required to pay quarterly estimated taxes, which can be a bit tricky to manage.

Here's a breakdown of the quarterly estimated tax deadlines:

State and local tax deadlines, such as sales tax and property tax, vary depending on the state and local authorities. It's essential to check with your own state and the states you operate in to stay on top of their due dates, deposit dates, and rules.

Tax calculators and tools can be a huge help when it comes to estimating your tax liability.

Self-employed individuals can use a self-employment tax calculator to estimate their tax and eliminate any surprises.

The corporate tax rate has been a flat 21% since 2018, thanks to the Tax Cuts and Jobs Act (TCJA). This change was a significant reduction from the previous tiered structure, which ranged from 15% to 35%.

The TCJA also introduced the Qualified Business Income (QBI) deduction, which allows certain entities to deduct 20% of their income. However, this deduction has specific qualifications and requirements.

The corporate alternative minimum tax (AMT) was reinstated in 2023, with a rate of 15% for corporations with average adjusted financial statement income over $1 billion. This will affect around 100 large corporations each year.

Here's a quick rundown of the key changes:

Corporate income rates have undergone significant changes in recent years. The Tax Cuts and Jobs Act (TCJA) reduced the corporate tax rate to a flat 21% in 2018, a change from the previous tiered structure with rates ranging from 15% to 35%.

For your interest: Does S Corp Pay Corporate Taxes

This reduction in corporate tax rate applies to all C corporations, regardless of their size or income level. However, it's worth noting that the corporate alternative minimum tax (AMT) was reinstated in 2023, applying to corporations with average adjusted financial statement income over $1 billion.

The corporate AMT is a 15% minimum tax, but it's estimated that only around 100 large corporations pay this tax each year. This is because the threshold for the AMT is quite high, and most corporations will not meet it.

Businesses may also pay income taxes at the state level. As of 2024, 44 states levy a corporate income tax, with rates ranging from 2.5% in North Carolina to 9.8% in Minnesota.

Corporate dividends are a crucial aspect of tax laws, and it's essential to understand how they work.

Corporations pay their shareholders dividends, which are then taxed on individual tax returns, resulting in "double taxation."

This means the income is taxed twice: once at the corporate level and again when paid out as dividends.

Recommended read: Do You Pay State Taxes on Dividends

Sales tax is a state tax that you're required to collect from customers and remit to the government. You may need to register, collect, and remit sales taxes in more than one state or local jurisdiction.

Forty-five states, the District of Columbia, and many localities levy a sales tax. This can be confusing, so it's a good idea to work with an accountant, especially if you sell products or services to out-of-state customers.

Depending on the state, you might have to file a sales tax return monthly, quarterly, or annually. You're still on the hook for sales tax even if you're an ecommerce store without a physical presence in any state.