5 TAXES you have to know
Right now it is tax time and i am seeing a lot trucking business getting jammed up because they don't understand how these different taxes work so i am going to break it down so that you can understand and hopefully avoid these same problems yourself.
I am going to break down the five tax types that are very important to your trucking business, now i know taxes might not be one of the most exciting aspects but it comes to running your trucking business taxes are going to be one of the most important aspects of running that business, not having handled properly can result in not only penalties and fines but it could also risk getting your whole business shut down.
We are going to jump into the five tax types that affect your trucking business.
1. Income tax. when in comes to income taxes we pay taxes on the net income that we generate, so when it comes to trucking business we calculate that number by taking our revenue minus our expenses and we are left with the profit was in the business and that is the number that we pay income taxes on. Now we pay income taxes at the federal level through the IRS and most likely you live in a state where you will pay state income taxes as well unless you live in one of the states that don't have income taxes like California, Florida just to name a few.
2. Payroll Tax. If you are a trucking business that employs W-2 employees then as a employer you are responsible for paying taxes on the wages that you pay to your employees and that number that percentage is about 7.65% so let's say for example you pay a hundred thousand dollars in total wages to your W-2 employees then as an employer you are responsible for paying $7,650 to the IRS.
3. Fuel Tax. We pay fuel taxes at the pump we are purchasing our fuel and every quarter when we file IFTA tax returns depending on what states we purchase fuel versus which state we actually drove miles.
4. Highway Use Tax. At the federal level we pay a one time annual tax to the IRS it is not as the 2290 just for using highway in our big trucks so at the federal level we pay the 2290. Now at the state level depending on what state are you operating in, you maybe subject to additional highway use taxes by the state.
5. Sales Taxes. As a trucking business you may end up paying taxes on parts and equipment, trucks and trailers and things like that so depending what state you are in and what state sales tax rate is, it's going to dictate how much are you going to pay in sales tax. Now one caveat to that is if you operate out of state where trucking companies are sales taxes exempt to find out if your state allows that sales taxes exemption status for trucking companies just do a quick google search.