What Taxes Do Small Businesses Pay?

All businesses have tax filing and compliance obligations, but whether any tax is owed — and which taxes apply — varies by business type and activity. For federal tax purposes, common categories include income tax, estimated tax, self-employment tax, employment tax and excise tax, though not all apply to every business.

Most businesses must file an annual income tax return. Partnerships file an information return, while sole proprietors report business income on their individual returns. Because federal income tax operates on a pay-as-you-go system, many business owners must also make quarterly estimated tax payments during the year. For additional guidance on filing requirements and recordkeeping, see IRS Publication 583, “Starting a Business and Keeping Records.”

Self-employment tax typically applies to net earnings from self-employment and covers Social Security and Medicare. You must generally file Schedule SE with Form 1040 or 1040-SR if your net earnings from self-employment are $400 or more.

If you have employees, you are responsible for employment taxes, including Social Security and Medicare taxes, federal income tax withholding and federal unemployment tax. These taxes must be deposited and reported on a regular schedule.

Certain businesses must also pay excise taxes if they manufacture or sell specific products, operate particular types of businesses or use certain equipment. Common examples include fuel taxes, environmental and transportation-related taxes and taxes on heavy highway vehicles. Excise taxes are reported on specialized IRS forms. Form 720 covers a wide range of excise taxes, including those on fuel, communications, air transportation and certain manufacturers’ excise taxes, where applicable. Form 2290 applies to heavy highway vehicles weighing 55,000 or more pounds. Forms 730 and 11-C apply to wagering businesses.

Deadlines and compliance

Missing filing deadlines can result in penalties and interest. The IRS Business Tax Calendar outlines key due dates and required actions throughout the year.

Because filing requirements vary by business structure and tax laws change frequently, consulting a qualified tax professional can help ensure accurate reporting, minimize liability and maintain compliance.