Finding Solutions for Growing Businesses

WSBDC (TAXES)

Complying with local, state and federal tax regulations is one of the most critical aspects of financial management for the small business owner. Failure to comply with these regulations may result in substantial penalties or even the closure of your business. The following information is not intended as a comprehensive discussion of tax regulation; it is merely an overview of some of the most common types of tax requirements.

FEDERAL EMPLOYER IDENTIFICATION NUMBER

All Internal Revenue Service (IRS) forms filed in the name of the business require the use of a Federal Employer Identification Number (FEIN) sometimes referred to as a "tax ID number". If your business is a corporation or a partnership, or you anticipate hiring employees (no matter what the legal structure of your business may be), you should obtain a EIN by filing a form SS-4 with the IRS,

INCOME TAXES

Different types of businesses (i.e. sole proprietorships, partnerships, and corporation) have different income tax requirements. One of the primary considerations in choosing a legal structure for your business is the tax implications of a particular structure. Each of the various types of legal structures have different requirements regarding filing dates, forms required and tax calculations. The fact that a business does not show a profit does not release it from its obligation to file the proper income tax forms.

PAYROLL TAXES

Any business with employees of any type must comply with federal and state payrolls requirements. This is true even if you are the sole employee of a corporation which you own. It is critical that you understand the various deadlines and requirements, or that you use the services of someone who does.
The major types of payroll taxes in Michigan are:

SINGLE BUSINESS TAX (SBT)

Individuals and entities (such as corporations) conducting business in the state of Michigan are subject to the Single Business Tax. This tax is not imposed on income (or profit) but rather on the "adjusted tax base" of the individual or business. It is often considered a "value added" tax. While income is an important component of the tax base, it is possible for a business to pay Single Business Tax even if the business if unprofitable.

SALES TAX

The sale of many types of tangible goods in Michigan incurs a sales tax. It is the responsibility of the business to collect this tax, keep accurate records and remit the funds according to established guidelines. Failure to comply with the sales tax requirements can result in serious financial consequences for the business.
For more information: contact The Michigan Department of Treasury, Sales, Use and Withholding Taxes Division, Lansing, MI, (517)373-3190 or Michigan Department of Treasury Single Business Tax Division, Lansing, MI(517)373-8030 or Michigan Employment Security Commission (MESC) Customer Service Office (800)638-3994.
To learn more about your tax obligations, called the MI-SBDC Headquarters at (313)964-1798 to identify a Small Business Development Center in your area.
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