Stay on top of taxation requirements
- January 27, 2011
The Virginia Department of Taxation is prepared to help you file and pay for all necessary business taxes. The department’s website 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 U.S. Return of Partnership Income return, and corporations must file a U.S. 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 going 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. However, the state has many tax credits, such as those for the 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 also is required.
There are many other state taxes that can apply to your business, such as aircraft sales and use, cigarette, beer and wine, and tire taxes. Check out the “Tax Facts” publication online 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 website to see if any tax deductions are applicable to your business. The site will highlight General Assembly’s most recent changes to the tax code.
New in 2011: New electronic filing requirements reduce the number of employees statements that can be submitted on paper. Employers who submit 150 or more withholding statements for 2010 must file them electronically. Companies with less than 150 employees can submit the W-2s on paper, but are encouraged to submit electronically.
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.