In the United States, US tax compliance is not only an obligation for businesses but also a key aspect of maintaining financial integrity. Below, we detail the various tax obligations and regulatory requirements for US entities.
Federal Income Tax
All businesses, except partnerships, are required to file an annual income tax return. Partnerships file an information return. The form you use depends on how your business is organized:
- Corporations file Form 1120 or 1120S.
- Partnerships file Form 1065.
- Sole Proprietorships report income on Schedule C of Form 1040.
- Limited Liability Companies (LLCs) tax filing requirements vary based on the election of how they’re treated for tax purposes.
- State and Local Taxes.
Each state has its own tax regulations and obligations. These can include income taxes, sales taxes, and franchise taxes.
Entities should check with their state’s Department of Revenue for specific tax filing requirements that can apply or be effective.
If a business has employees, various forms of payroll taxes need to be withheld from employees’ wages. These include:
- Federal income tax withholding (Form W-4).
- Social Security and Medicare taxes (FICA).
- Federal unemployment (FUTA) tax.
- Employers are required to deposit these taxes regularly and file employment tax returns (Form 941 or Form 944), along with (Form 940) for FUTA taxes.
Please note that excise taxes apply to businesses that manufacture or sell certain products; operate certain kinds of businesses; use various kinds of equipment, facilities, or products; or receive payment for certain services. Refer directly to the IRS’s Excise Tax Guide for detailed information.
Sales and Use Tax
Businesses engaged in retail must collect sales tax on most items they sell. Certain services may also be taxable.
- Entities including sole proprietors, partners, and S corporation shareholders generally have to make estimated tax payments if they expect to owe tax of $1,000 or more when their return is filed.
- Corporations generally have to make estimated tax payments if they expect to owe tax of $500 or more when their return is filed.
Businesses may need to file information returns if they make certain payments to others. These could include rent, salaries, wages, premiums, annuities, etc. The most common form used for this purpose is Form 1099.
International Tax Obligations
If you are a U.S. business with operations outside the country, you may have additional reporting requirements. You might need to file Form 5471, “Information Return of U.S. Persons With Respect to Certain Foreign Corporations,” or Form 8865, “Return of U.S. Persons With Respect to Certain Foreign Partnerships.”
Deadline filing requirements: Taxes
It is important to note that there are deadlines depending on the type of entity and tax treatment to apply for tax extensions.
In the U.S. it is quite common to request an extension that provides up to 6 months to confirm and file federal and state tax returns.
Taxes – Deadline
- March 15th: deadline for filing tax returns – fiscally transparent entities (S-Corp, LLCs treated as partnerships).
- April 15th: deadline for corporations (C-Corporation, DRE – sole proprietorships, and U.S. fiscal residents).
- June 15th: deadline for non – U.S. residents and U.S. taxpayers living and working abroad.
Late filing of your tax extension may result in civil and criminal penalties. Please note that it will depend on the type of entity, whether it has one single member, and whether the company has a profit or any income during the fiscal year.
*In addition to the tax obligations described above, the annual renewal of the entities must also be considered.
To conclude, navigating the US tax environment can be complex. Hence, it is essential to have a knowledgeable tax advisor who can guide you through these requirements. Entities must ensure they understand their tax compliance obligations to avoid penalties and maintain good standing with tax authorities.
This content is for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice.