How to Pay Taxes for Small Business

Owning and running your own business means freedom and the ability to earn significantly more than you might earn as someone's employee. However, in running your own business, you also have to deal with a number of responsibilities that are not an issue for normal hourly workers, one of these being the proper payment of taxes.

• 1

  Keep a record of your revenue and business expenses. Maintain a strict separation between your business expenses and personal expenses, because money that you spend on any business-related things such as machinery, computers or vehicles is tax deductible. One of the best ways to do this is by having separate checking accounts for your business and personal expenses. Keep strict records of the different types of expenses you incur, as the government taxes different expenses in different ways.

• 2

  Fill out and submit the correct tax forms. All of these forms are available on the IRS website. Fill out the form specific to your form of business. Fill out the necessary forms for all applicable types of taxes: income tax, self-employment tax, Social Security and Medicare taxes, unemployment tax and excise taxes. Not all of these are applicable to all businesses, however. For instance, if you do not employ anyone or if you only employ contractors, you do not need to pay unemployment taxes. Likewise, you only need to pay excise taxes if you sell items that have excise taxes levied on them, such as cigarettes.

• 3

  Make the actual payment. To pay the IRS, you may use a credit card, debit card or an electronic funds withdrawal. You may also enroll in the Electronic Federal Tax Payment System (EFTPS), which streamlines the process even more. Businesses must pay their taxes quarterly (every three months), and you may pay up to 120 days before payment is due.