What Taxes Do You Take Out for a NEMT Business
Owning a NEMT company is not only a profitable business but also a vital contribution to the community. Your non-emergency medical transportation company is filling in the gap that healthcare has an abundance of. Like any business, the budget for a paratransit company is important. In order to keep track of your expenses, stay away from unbudgeted ones and be on top of the game all the time, you need to keep track of tax laws. Launching your NEMT business will require some paperwork to be done. There is a common misconception that taxes are paid once a year, thus, handling them is a one- time a year job. The fact is that there are types of taxes paid in various time periods and having an accountant is the best idea for managing them unless you are one yourself. The legal and financial sides of setting up a business are co-dependent. Whether you hire an accountant or not, every business owner should get acquainted with the following terms.
The first step is to decide what legal structure of the business you need. Sole proprietorship, LLC, partnership or corporation. Assess your resources and pick one. Mind that the structure you choose directly influences the taxes to pay. It is crucial for the business to have a solid legal standing and pay taxes in a timely manner. For more details, you might address the US Small Business Administration at sba.gov. In some cases, it is reasonable and cost-efficient to change the business structure in order to save on taxes.
The next step is getting your DBA or business name. The name should be registered with the state authorities in order to make sure that it is not taken yet. On confirming the company name, you might want to set up the website right away and start working on a marketing strategy.
Although it is not a compulsory thing for sole proprietors, they might still get it. Thus, we have established that EIN will be needed if your business structure is partnership or cooperation and if you hire employees. EIN is used to identify the business when paying taxes. Although it might seem that you do not need one, it is recommended to get it. EIN is obtained free of charge.
State and Local Taxes Registration
Although tax requirements vary from state to state there are two common types. These are income tax and employment tax. Your federal tax obligations vary as well depending on the business structure. However, here it should be noted that there are time frames for paying some of the taxes. To understand these time frames, one needs to decide on the tax year. Your tax year does not necessarily correspond to a calendar year. You might start your tax year the first time you pay taxes. More information on Tax Year can be found at IRS.gov.
The federal taxes for business fall under the following categories:
- Self- employment taxes
- Excise tax
- Estimated tax
- Employer tax
- Income tax
Self- employment tax provides your social security. By paying it you cover things like retirement and disability benefits and hospital insurance, et al.
Employer tax might not be relevant to your case, but excise tax is the one to pay close attention to. It includes environmental tax, transportation tax, and fuel tax.
Income tax is imposed on all types of business except the partnership model. This payment is done as you receive income throughout the year. If you hire employees, you might be in charge of withholding tax payments from their salaries, depending on the state. Some states, in particular, Alaska, Nevada, Florida, South Dakota, Wyoming, Washington, and Texas do not have an income tax, while Tennessee and New Hampshire impose taxes on an income from dividends only. In addition, the business structure you selected will influence your taxes, so make sure to check the state specifications for that.
With this brief overview of taxes that a business needs to pay it seems that the workload is immense. Acquiring software for processing your taxes is a wise decision because the cost of a mistake in your tax paperwork is higher than the cost of the software. With the nemt dispatch and billing software, and payroll software, your business will be running smoothly without the need of your presence there round- the- clock.