Minnesota residents who own and operate a business enterprise should be cognizant of the federal and state tax laws that affect them. There are four general types of federal tax. Each one has its own characteristics and should be considered separately.
Any business that is registered with the state of Minnesota, with the exception of partnerships, must file an income tax return every year. Only an information return is required of partnerships. Self-employment tax must be paid by any individuals who work for themselves. This covers any portion of Social Security and Medicaid tax that the person may be responsible for.
Employment taxes must also be paid by business owners who employ other workers. This tax liability includes federal unemployment tax, federal income tax withholding, Social Security and Medicaid for the worker. Excise taxes may also be due. Depending on what industry the business is in and what goods it produces they may be required to pay more taxes on specific items and actions. For example, the federal government imposes an excise tax on any enterprise that utilizes trucks or other large vehicles on public highways. There are also taxes on wagering and any sort of gambling-based enterprise. Several other types of excise taxes may be applicable.
Businesses operating in Minnesota or anywhere in the United States will have to pay their taxes accurately and on time or face the possibility of serious legal consequences. Consultation with an attorney may be advisable for those who wish to mitigate the repercussions of an Internal Revenue Service audit or imposition of penalties, or to prevent such an action from being taken in the first place.
Source: IRS, “Business Taxes“, October 01, 2014
This information is general in nature and should not be construed as tax or legal advice.