Small business taxes can be both a headache and an opportunity. They can be complicated, due to myriad tax requirements for small businesses. But they also provide an opportunity to benefit from valuable tax deductions that reduce your tax liability.
To make sure you file your taxes accurately and on time, your best bet is to use bookkeeping software or hire a bookkeeping service, and work with a tax professional such as a CPA. Your accountant can answer questions about various strategies and tax deductions.
But there may be times when you want to research tax issues yourself and that’s when small business tax calculators can come in handy. Here we share some popular small business tax calculators, as well as explain why many tax calculators for small businesses are different than what you may expect.
Small Business Income Tax Rate Calculator
If you’re looking for small business income tax rate calculators, chances are you’re trying to figure out how much you’ll pay in taxes on the profit you make in your business. Before we can get to that, you need to understand that your business structure will help determine what tax forms your business needs to file, and the amount of taxes you’ll pay.
Compare Business Tax Solutions
Tax software and services can save you time and money by simplifying the tax prep and filing process. Use Nav to find the right tax solution for your business.
Most small businesses operate as sole proprietorships which means there is no separate business structure. Instead, the tax activity will “pass through” to the owner’s personal tax returns and be reported on a tax form called Schedule C. You’ll report information about your income and deductions on Schedule C, and the profit you make will then be included on your personal tax return.
The IRS will treat an LLC as either a corporation, partnership, or as part of the LLC’s owner’s tax return (a “disregarded entity”) depending on elections made by the LLC and the number of members.
A domestic LLC with at least two members is classified as a partnership for federal income tax purposes; however it can choose to file Form 8832 and affirmatively elects to be treated as a corporation. For income tax purposes, an LLC with only one member is treated as an entity disregarded as separate from its owner, unless it files Form 8832 and elects to be treated as a corporation. However, for purposes of employment tax and certain excise taxes, an LLC with only one member is still considered a separate entity.
S Corporations are also considered pass through entities. This type of corporation elects to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates.
Shareholders who are employees of the corporation will also earn a salary and will be subject to income-tax withholding. Additional monies may be paid out as distributions or “owner’s draw.” Payroll taxes aren’t paid on distributions, so the owner may save money that way. (The owner-employee must pay themselves a reasonable salary, though.)
Partnerships also “pass through” profits or losses to its partners. Each partner reports their share of the partnership’s income or loss on their personal tax return and pays taxes at the applicable rate. The partnership will file an information return with the IRS reporting income, deductions, gains, losses, etc., from its operations, but partners are the ones who pay taxes.
Corporations are the anomaly here because they are not considered pass-through entities. Instead, the corporation pays taxes on profits and then shareholders are taxed on monies distributed as dividends. (This is referred to as “double taxation.”) In addition, shareholders can’t deduct any loss of the corporation.
As you can see, with most small businesses, profits flow through the owners, shareholders or LLC members, so their tax rate is what’s important. For that reason the IRS tax tables are often the most helpful source of information for calculating small business tax rates.
Use IRS Form 1040 ES to figure your estimated tax. It includes a worksheet you can use to calculate your estimated taxes. If you use small business tax software, it should provide this calculation as well.
Business Tax Refund Calculator
As we’ve explained, most small businesses operate as pass-through entities and any profits flow through to the individual tax returns of members, shareholders, partners or self-employed individuals. That means the business itself won’t be eligible for a tax refund.
However, self-employed individuals are required to file quarterly estimated taxes. Shareholders of corporations who are employees will also have taxes withheld from their paychecks. If the individual overpays taxes, either through quarterly estimated tax payments or withholding from salaries, there may be a refund due.
You can estimate your tax withholding using the IRS online withholding calculator.
Personal Tax Deduction For Business Loss Calculator
If your business loses money (more expenses than income) you may have a net operating loss (NOL). This may reduce your taxable income on your personal tax return. However you may not be able to deduct net losses in excess of a threshold amount in the current year. Instead, you may be able to carry losses forward to future years.
IRS Publication 536 explains Net Operating Losses in detail and includes a worksheet you can use to calculate your loss.
Your business tax software will also help you calculate a loss and help you understand whether you can take that loss in full in the current tax year, or whether you need to carry some of it forward.
Self Employed Business Tax Calculator
Self-employed individuals, 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.
Self-employment tax is a tax consisting of Social Security and Medicare taxes. If you work for someone else, they withhold this from your paycheck (and pay part of it). When you’re self-employed, you’re responsible for this tax.
The self-employment tax rate is 15.3%. The rate consists of two parts: 12.4% for social security (old-age, survivors, and disability insurance) and 2.9% for Medicare (hospital insurance). For 2022, the first $147,000 of your combined wages, tips, and net earnings is subject to any combination of the Social Security part of self-employment tax, and Social Security tax.
The Intuit Turbotax Self Employed Calculator can help you calculate your estimated taxes.
Self-Employment Tax Deduction
When figuring your adjusted gross income, you can deduct the employer-equivalent portion of your self-employment tax. However, this deduction only affects your income tax. It does not affect either your net earnings from self-employment or your self-employment tax.
Small Business Employer Payroll Tax Calculator
If your business will pay employees, you’ll need to calculate, withold and pay payroll taxes. Payroll may include state, local and federal taxes as well as unemployment tax. It can get complicated quickly.
Even if you are the only employee in your business subject to payroll taxes (for example, as the owner-employee of an S Corp.), you may want to use a payroll service to make sure it is done correctly. Some accounting professionals also offer payroll services.
Gusto offers a free employer tax calculator that can help you understand estimated costs.
S Corp Business Tax Calculator
An S Corporation may save an owner-employee money on taxes. That is because they may pay themselves a salary, from which payroll taxes must be deducted, as well as take our profits in the form of distributions, which are not subject to payroll taxes.
Incfile’s S Corporation Tax Calculator can help you get an idea of the potential tax savings with an S Corp. Note that LLCs may also elect to be taxed as an S Corp.
It’s very important to pay a reasonable salary and withhold payroll taxes or potentially incur taxes and penalties. Discuss this with your tax professional.
Capital Gains Tax Calculator For Sale Of Business
You may have heard of capital gains tax when you sell stock, but it may also apply if you sell your business. Capital gains tax rates vary depending on how long you’ve owned the business asset as well as the type of business asset sold. And as mentioned before, with pass-through entities this will pass through to the individual’s tax return.
You can sell part or all of your business, and that can result in different capital gains taxes. According to the IRS, the gain or loss on each asset is figured separately. Some states also assess capital gains tax.
Because the sale of different types of business assets will result in different tax treatments, it’s wise to consult a tax advisor before you sell. You may be able to structure the sale in a way that reduces taxes.
Small Business Tax Bracket Calculator
We know we’re sounding like a broken record here, but for most small business owners, business profits will flow through to personal tax returns. That means the tax bracket that applies will depend on the individual’s filing status (married versus single, for example) and amount of taxable income from all sources, not just the business.
Along with self-employment taxes and quarterly estimated taxes, that means it’s essential for small business owners to plan carefully to make sure they pay the right amount of taxes throughout the year to avoid penalties.
For tax brackets you’ll want to look at the IRS tax tables, taking into account profits and/or distributions from the business that will flow through to your tax return.
Home Business Tax Calculator
There is no tax calculator specifically for a home-based business. Instead, the taxes the home-based business owner will pay typically depend on the business structure and money that flows through the business to the business owner’s tax return.
If you plan to take a home office deduction and are looking for a calculator to help you figure out that deduction, the IRS offers you the choice of a standard deduction or a simplified method. This can be a valuable deduction for business owners who qualify.
Business Mileage Tax Relief Calculator
You may be able to deduct certain expenses related to operating a vehicle for your business. You can choose to use the actual expense method or the standard mileage rate for eligible use of your vehicle for business purposes. (If you use the vehicle exclusively for business you may be able to deduct the full cost of ownership.)
The standard mileage rate for 2022 for business use of a vehicle is 58.5 cents per mile.
You need to track business use of your vehicle, and you should keep accurate records if you want to take this deduction. Your tax software will help you calculate business mileage tax deductions. Or you can use a standard calculator, and simply multiply the number of business miles by .585 if you want to use the standard mileage rate.
Small Business Dividend Tax Calculator
Sole proprietorships, LLC and partnerships do not pay dividends. Instead, they pay distributions or profits simply flow through to the individual tax return. S Corporations typically make non-dividend distributions.
Corporations may pay dividends to shareholders and they often do so in cash. If the corporation in which you are a shareholder pays you a dividend of more than $10, you’ll receive IRS Form 1099-DIV. If you receive more than $1,500 of taxable ordinary dividends, you’ll need to file Schedule B (Form 1040). For large amounts of dividends, Net Investment Income Tax (NIIT) may be required, and you may have to pay estimated taxes.
The tax rate for dividends depends on filing status, income and type of dividend.
Ordinary dividends are the most common type of distribution from a corporation. They are paid out of earnings and profits and are ordinary income to you.
Qualified dividends are the ordinary dividends subject to the same 0%, 15%, or 20% maximum tax rate that applies to net capital gain. Qualified dividends must meet certain requirements and have been held for a specific period of time.
State Sales Tax Business Calculator Resource
State sales tax rules are complex and ignoring them can be very expensive. They can vary by state, county or even city. As a business you’re responsible for collecting and remitting sales tax anywhere your business is deemed to have a nexus, which does not necessarily mean a physical location. Your business may also have to pay use tax on purchases on which it did not pay sales tax.
If you are selling items that may be subject to sales tax, your best bet is to use a tax software solution that will automatically calculate sales tax. If you are selling retail goods, this could be part of your merchant processing solution or an ecommerce shopping cart. Sales tax calculators can also be incorporated into accounting software such as Quickbooks.
This article was originally written on June 20, 2023 and updated on February 22, 2024.
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