If you own and operate a real estate business, you have more to think about with your taxes than filing before April 15th every year. There are other important dates throughout the year, and there are important taxes to keep in mind, as well. Here is an introduction to the various real estate business taxes you can incur:
- Federal Income Tax – Your personal income tax and your business income tax may be the same, depending on how your business is set up. Corporations, for instance, pay taxes separately from the individuals that run them, and the deadline to file for an S Corp is March 15.
- State Income Tax – If you live in a state where you are required to file state income taxes, you’ll have to consult your state’s laws concerning when and how to file. Chances are, you’ll have to file separately from your personal income, especially if you run a corporation or LLC.
- Estimated Tax – Again, depending on the structure of your business, if you expect to pay $1,000 or more in taxes, then you’ll have to estimate your taxes and pay quarterly.
- Self-Employment Tax – If you work for yourself and earn more than $400 per year, you’ll have to pay a Social Security and Medicare tax. In 2014, that tax rate is 15.3 percent of your net business income up to $117,000 and 2.9 percent for income over that.
- Employment Tax – If you have employees, you have to pay Social Security and Medicare taxes on their behalf. You also have to withhold their federal income taxes and pay that, plus you’ve got to pay their federal unemployment tax and appropriate state taxes. Penalties for failure to pay these taxes is enormous, so you might want to hire a specialist accountant to handle calculation of these taxes for you.
If you sell a product–for instance, if you are an author and you sell books and other products related to your real estate business–you may have to pay sales taxes. Almost every state levies sales taxes on sales made within the state, but selling across state lines may not accrue a sales tax burden. Consult a tax accountant or attorney for guidance on your situation.