Payroll Taxes - Sales & Use Tax - Other
Payroll Taxes are the taxes withheld from employees plus the employers share of employment taxes based on employees earnings. I can assist you in establishing a system that will ensure that the payroll taxes are properly calculated and reported and the taxes paid. Payroll taxes include federal income tax withheld, FICA (social security) withheld, Medicare withheld, state income tax withheld, state disability insurance withheld, employers share of FICA, employers share of Medicare, state unemployment tax and federal unemployment tax. Payroll taxes are reported every quarter except federal unemployment taxes which are reported annually. W2s must be prepared annually for each employee. The taxes must be remitted on a timely basis, which may be as often as every payday. Penalties for late payment accrue quickly. The business owner, even a corporation, can be held personally liable for payment of the taxes. Hiring someone as an independent contractor must meet specific guidelines to legally not involve payroll taxes. It is likely that a disgruntled or naive ex-independent contractor or ex-cash employee will apply for unemployment benefits. The E.D.D. will audit your business and bill you for both the taxes that should have been withheld and the employers share of taxes plus penalties and interest.
Sales and Use Tax is charged on retail purchases of tangible personal property. An adequate accounting system must be in place to correctly record taxable sales and the related sales tax liability to the state. Sales tax is the portion paid when the purchase is made. Use tax is the same rate as sales tax applied to taxable purchases on which no sales tax was charged by the seller, as in an out of state purchase.
Sales and use tax is administered by the California Board of Equalization. Retailers, any one that is selling a product to the ultimate consumer, must have a sellers permit which will allow them to purchase materials or finished items that they will ultimately sell without paying sales tax. There are many exceptions and rules in applying sales tax. If sales tax should have been charged on a sale but was not, the seller is still responsible for paying the tax. Sales volume determines the frequency of filing and making payments. Do not be overly optimistic in projecting your sales on the sellers permit application since this will effect the deposit that may be required.
Personal Property Tax
Personal property tax is administered by each county assessor. An annual affidavit must be filed if your business owns $100,000 of personal property or if the assessor mails you an affidavit. Personal property is machinery and equipment, furniture and fixtures and inventory. To correctly complete the affidavit, detailed records of taxable assets must be maintained. Based on the affidavit, the assessor will issue a tax bill.
In accordance with IRS Circular 230, the information on this web site is not intended or written to be used, and cannot be used as or considered a "covered opinion" or other written tax advice and should not be relied upon for the purpose of avoiding tax-related penalties under the Internal Revenue Code; promoting, marketing, or recommending to another party any transaction or tax-related matter(s) addressed herein; for IRS audit, tax dispute or other purposes.