This is a frequently asked question because people want to know how much they will need to pay, so they can prepare and be sure to have the money they need to meet their tax obligations.
The short answer is that every small business is unique, but we can still give you some idea of what to expect. The Small Business Administration released figures that showed an average of 19.8% as the effective tax rate for small businesses. The percentages can vary depending on your business structure and other factors.
There are five basic types of taxes that business owners may need to pay. They are as follows:
Income tax
Self-employment tax
Estimated tax
Employer tax
Excise tax
The Tax Cuts and Jobs Act of 2017 changed the tax code for corporations. As of January 1, 2018, C corporations have a flat corporate income tax rate of 21%. This rate does not apply to other business structures. You should keep in mind that if you have a sole proprietorship or partnership—and in some cases, an LLC—you may need to pay self-employment tax.