Learn the Basics of Paying Business Taxes Online
Understanding your tax obligations is an important aspect of setting up a new business. There's a range of different forms and requirements to be aware of, and these can change depending on the structure of your business. Knowing the ins and outs of paying business taxes online can help you stay on top of tax requirements while saving time, money and headaches.
Business tax forms
Because businesses take various legal structures, there are several different tax forms you may need to file. These are the forms you're most likely to use in filing your business taxes:
- Schedule C: Business owners with a sole proprietorship can use the IRS Schedule C, or Form 1040, to report their self-employment income or losses. This form is generally filed along with your personal income taxes.
- Schedule K-1: If your business is an S-Corporation, each business partner can use the IRS Schedule K-1, or Form 1065, to report their share of the partnership's income, deductions and credits. This form is also typically filed along with personal income taxes.
- Form 1120: Businesses set up as a corporation must file their income taxes using IRS Form 1120. If your business is filing Form 1120, you'll do this separately from your personal income tax filing.
- Schedule B: If your business is a corporation, you'll need to file IRS Schedule B, or Form 1040, to report interest and dividends you've received as a corporate owner.
Types of business taxes
Understanding how to pay business taxes online starts with knowing the types of taxes you're subject to. You may have differing taxes to file depending on the type of business you run. The major types of business taxes you may need to pay include:
- Income tax: Like individuals, all businesses that aren't tax-exempt are required to pay taxes on their income.
- Self-employment tax: Because you're working for yourself, you must pay the Social Security and Medicare taxes that employers generally cover for their employees.
- Payroll tax: If you have employees, you'll need to pay Social Security and Medicare taxes for them. You'll also have to set up paycheck deductions for federal income taxes, the employee's contribution to Social Security and Medicare taxes, and federal unemployment taxes.
- Sales tax: If your business is in one of the 45 states that levy sales taxes, you'll need to calculate this based on purchases from your business so you can collect and report the proper amount.
- Estimated quarterly taxes: Businesses are generally required to file their taxes annually but pay their estimated taxes quarterly.
File and pay your taxes online
Once you know what taxes you'll need to pay, there are several online portals and options available to help you take care of them quickly and easily.
The Electronic Federal Tax Payment System, or EFTPS, allows corporations to easily pay their business taxes online. To set up your account, you'll need an Employment Identification Number, or EIN, first. Once you've set up your account, you can schedule payments in advance and establish email notifications to track your payments.
IRS Direct Pay
Small businesses not set up as a corporation may choose to pay their taxes using the IRS Direct Pay website. This site allows you to pay your Form 1040 taxes and estimated quarterly taxes. With Direct Pay, you can make your tax payment from your bank account. Debit and credit card payments aren't permitted with this portal.
Debit and credit card payments
If you need to use a debit or credit card to make your tax payments, the IRS has several approved payment processors, although there's a fee associated with these options. The fee doesn't go to the IRS, but it's tax-deductible as a business expense.
Pay when you e-file
Tax preparation software and service providers help you pay your business taxes online when you e-file. It can also give you options to make payments through your bank account or with a card. However, you'll likely have to pay a processing fee to the tax-prep service.
Navigating your options
To optimize the way you handle your business taxes, consider partnering with a tax specialist. They have the experience to help you navigate paying taxes and ensure you get the highest return possible. Having assistance with filing your taxes accurately and on time can give you peace of mind as you grow your business.
Financial insights for your business
This information is provided for educational purposes only and should not be relied on or interpreted as accounting, financial planning, investment, legal or tax advice. First Citizens Bank (or its affiliates) neither endorses nor guarantees this information, and encourages you to consult a professional for advice applicable to your specific situation.