Common Taxes For Small Businesses In Indiana

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Common Taxes For Small Businesses In Indiana

Common State and Federal taxes paid by small businesses

Bob York – Small businesses in Indiana are subject to various taxes; sales tax, self-employment tax, income taxes, and property taxes, etc. In addition, there are various excise taxes that may apply to certain activities. Noncompliance with collecting, remitting, paying, and filing these taxes can result in the imposition of significant penalties being assessed by Federal and State governments. The best way to comply with these various responsibilities is to prepare and follow a tax calendar and to consult with an accountant.

Below is a summary of the most common taxes:

Sales Tax:

7% Indiana sales tax imposed on purchases of taxable products

7% Indiana sales tax collected from product sales

Payroll Taxes:

  1. Employers share of Social Security tax: Paid to Internal Revenue Service
  2. Employers share of Medicare tax: Paid to Internal Revenue Service
  3. Employees share of Social Security*: Deducted from employees wages and paid to the Internal Revenue Service
  4. Employees share of Medicare tax : Deducted from employees wages and paid to the Internal Revenue Service
  5. Employee withholding of Indiana and Indiana county taxes: Deducted from employees wages and paid to the State ofIndiana
  6. Unemployment tax on employers

(a)    Federal: Paid to Internal Revenue Service

(b)  Indiana: Paid toIndianaWorkforce Development

Self-employment tax*:

15.3% of net profit earned by sole proprietorships, LLC members, and partners of partnerships. Paid to the Internal Revenue Service

Income taxes:

  1. Federal income taxes on profits earned by sole proprietorships, LLC members, and  partners of partnerships. Paid to the Internal Revenue Service
  2. Indiana income taxes on profits earned by sole proprietorships, LLC members, and partners of partnerships. Paid to the State of Indiana
  3. Indianacounty taxes on profits earned by sole proprietorships, LLC members, and partners of partnerships. Paid to the State of Indiana

Property taxes:

  1. Business real property taxes assessed on land and buildings and paid to local jurisdictions.
  2. Business personal property taxes assessed on machines, equipment, etc. and paid to local jurisdictions.

* Temporarily reduced by existing law

Bob York is a Business Advisor for the Northwest Indiana Small Business Development Center, an organization with the mission of having a positive and measurable impact on the formation, growth, and sustainability of small businesses in Indiana, and to develop a strong entrepreneurial community.  Bob can be reached at ryork@isbdc.org

Robert York


Robert York can be reached at ryork@isbdc.org.
Posted in: Financial, Taxes

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