Business Tax Law

To understand business tax law, you need to know some of the common forms of businesses. The main ones include sole proprietorship, partnership, corporation and limited liability company (LLC). How your business will be taxed will depend heavily on which form you operate your business.

Tax Deductions

EIN

You need to have a business tax identification number if you are taking the services of employees. This Employer Identification Number (or EIN) is assigned to every business for withholding deposit and tax reporting purposes. The EIN is different from your individual social security number; it is more of an identification for the business entity. You need to have both a state and federal Employer Identification Number.

Permit or License

With the help of the Employer Identification Number, withholdings can be remitted to the state tax authorities and the IRS. The kind of business you are operating decides whether you need a permit or license. In some cases, your business location and state and federal rules also have quite a important role to play in terms of deciding on permit or license.

Many local governments require a business license before you start your business. If you have any queries regarding business license requirements from the local government, you should contact the information centers that are set up by the local government, usually city hall. If you are operating a business under fictitious name, you are required to fill a fictitious business name statement. In addition, you need to publish a statement in this regard in a newspaper.

Limited Partnership and Corporation

In business tax law, a limited partnership can be defined as an association of one or more general partners cohesively with multiple limited partners in order to operate business for profit as co-owners. One important thing that you must take note of in a limited partnership is the fact that the limited partner enjoys limited liability. On the other hand, it is the responsibility of the general partners of the limited partnership to follow all the terms and conditions.

Separate from its shareholders and members, a corporation is a legal entity that has number of benefits for business owners. One of these benefits is that there is general limited liability in a corporation. Even better, there is no restriction with regard to number of shareholders.