Get Business Taxes: Part Of The Expense Of Making Money

A corporate tax is a tax on the profits of a corporation. The taxes are paid on a company's taxable income, which includes revenue minus cost of goods sold (COGS), general and administrative (G&A) expenses, selling and marketing, research and development, depreciation, and other operating costs.

Key Takeaways Tax expenses are the total amount of taxes owed by an individual, corporation, or other entity to a taxing authority. Income tax expense is calculated by multiplying taxable income by the effective tax rate. Other taxes may be levied against an asset's value, such as property or estate taxes.

If your net business income was zero or less, you may not need to pay taxes. The IRS may still require you to file a return, however. Even when your business runs in the red, though, there may be financial benefits to filing.

Net profit is the amount of money your business earns after deducting all operating, interest, and tax expenses over a given period of time. To arrive at this value, you need to know a company's gross profit. If the value of net profit is negative, then it is called net loss.

All state, local, and foreign taxes paid or accrued in connection with trade or business or production of income are deductible. In addition, annual fees paid to keep a business license current are deductible as an ordinary and necessary business expense.

A business's gross profit is the money it has left after paying for the goods and services it sold. Its net profit is the money left after paying absolutely all expenses and taxes.

Whether you run a local real estate business or restaurant, your small business income tax rate will be based on your business structure. Some small business owners pay business income taxes on their personal tax returns, while others file separate business tax returns based on their company's net earnings.