Stay on top of taxation requirements
- January 27, 2010
The Virginia Department of Taxation is prepared to help you file and pay for all necessary business taxes. The department’s Web site at http://www.tax.virginia.gov makes it easy and less time-consuming for businesses to file taxes, register and access return and payments records. The site is available 24 hours a day. Download “Tax Facts” under the homepage’s Publications section to get detailed information on Virginia’s tax laws.
• Obtain a federal tax identification number, known as an Employer Identification Number (EIN), to register with the IRS. Most businesses require this. You can apply online at http://www.irs.gov/smallbiz or call (800) 829-4933.
• The Federal Income Tax depends on the legal form of business. Sole proprietorships use IRS Form Schedule C along with their personal income tax form, partnerships must file a Federal Partnership return and corporations must file a Federal Corporation Income Tax Return.
• Federal Payroll Tax is required for businesses that include other employees. This requires employers to withhold federal, Social Security and Medicare taxes from employees’ paychecks.
• The IRS offers a detailed guide on tax requirements for small businesses at http://www.irs.gov/smallbiz
• You must register your new business with the Virginia Department of Taxation. Most new businesses registering with the state now use the department’s online registration process at http://www.tax.virginia.gov The o.nline registration system allows users to register with the Virginia Department of Taxation and the Virginia Employment Commission at the same time.
• The sales and use tax in Virginia is 5 percent, with 4 percent going to the state and 1 percent to localities. It is applicable to all retail sales or receipts from leases of tangible personal property.
• Corporate income tax is required for corporations registered with the State Corporation Commission. The corporate income tax rate is 6 percent of the company’s federal taxable income. The income tax rate has not changed since 1972. The state includes many tax credits, however, including creation of new jobs, expenses for on-site daycare and costs associated with job retraining.
• If employers are required to withhold taxes under federal law, Virginia withholding tax is also required.
• There are many other state taxes that can apply to your business, such as aircraft sales and use, cigarettes, beer and wine, and tire tax. Check out the “Tax Facts” publication for information on additional taxes.
• Local taxes include business, real estate, machinery and tools, and personal property taxes. In Virginia, counties and cities are separate taxing entities. Check with your locality for details on taxes.
• Make sure you visit the department’s Web site to see if any tax deductions are applicable to your business. The site will highlight the most recent changes to the tax code from the General Assembly.
• A new rule this year is that employers are not required to withhold income tax from employees who are military spouses that have moved to the state because of their spouse’s military service.
A number of local taxes will apply to your business as well. Make sure you contact your local government for information. Local taxes often include business tax, real estate tax and tangible personal property tax. Some localities also have additional sales tax rates and some levy a consumer’s tax on utility purchases. In Virginia, counties and cities are separate taxing entities. Depending on a business’ location, a company will pay either county or city taxes.