Understanding your business’s tax bracket is key to planning effectively and keeping more of what you earn. Different types of businesses, from sole proprietorships to corporations, face varied tax rates based on income levels, structure, and location. Knowing which tax bracket you fall into can help you make strategic decisions, identify potential deductions, and avoid surprises when filing. Our tax experts can help you assess your current bracket, explore ways to minimize your tax liability and identify growth opportunities.
The Different Types of Tax Brackets:
Sole Proprietorships
This is where you are the owner of your business, which is not incorporated. So, you will pay business taxes based on your personal tax rate, which can range anywhere from 10% to 37%.
Tax Rate: 10%–37%
Corporation (C-Corp)
Corporations are an outlier in terms of the rate at which they get taxed. In 2018, the JOBS Act was passed, creating a flat tax rate of 21% rather than a tax rate based on your personal tax rate. This flat rate is considered a tax cut, as personal tax rates for corporations are typically higher than 21%.
Tax Rate: 21% Flat Rate
Partnerships
Each owner of a partnership will pay their personal income tax bracket that is equal to their share of the business. So, if there are two business owners in an equal partnership, each will pay 1/2 of their personal income tax to add up to a full business partnership tax.
Tax Rate: 10%–37%
Limited Liability Corporations (LLCs)
LLCs combine the benefits of partnerships, sole proprietors, and corporations. The benefits are pass-through taxation and limited liabilities. LLCs are popular among small business owners due to their liability protection and flexible management structures.
Tax Rate: 10%–37%
S Corporations
S Corporations are unique types of corporations that are formed to avoid the double taxation that regular corporations receive. The tax bracket itself is based on the owner’s personal income.
Tax Rate: 10%–37%
Despite most business types following a personal tax rate, each business type has unique tax refunds, credits, and codes that only exist for each specific tax bracket or business type. So be sure to research extensively tax planning for your tax bracket and business type or hire a professional tax planner such as us at Intentional Accounting, where we can do all that for you!
How Many Times Does Your Business Have to Pay Taxes Per Year?
Generally, most businesses must make estimated tax payments quarterly if they expect to owe $1,000 or more in tax when filing their return. Additionally, employers need to withhold payroll taxes, which typically involve paying federal and state income taxes and Social Security and Medicare taxes on a regular basis—often monthly or semi-weekly. Some businesses may also need to pay sales tax on a monthly or quarterly basis, depending on state regulations. Understanding these obligations is crucial for effective cash flow management, so consulting with our tax professionals at International Accounting can help ensure compliance and optimal planning.
Meet With the Tax Experts at Intentional Accounting!
Meet with the tax experts at Intentional Accounting and discover a team dedicated to simplifying your tax experience. From navigating complex tax codes to maximizing deductions, our professionals bring both expertise and a personal touch to every consultation. We tailor our strategies to fit your unique financial situation, ensuring you stay compliant while optimizing your tax outcomes. Trust Intentional Accounting to handle the details, so you can focus on what matters most. Book your appointment today and take the stress out of tax season!
