contribute as an Entrepreneur means going to wearing many hats that eventually means supervising different tasks and peoples. Being an Entrepreneur is not an easy job, it faces many highlights and challenges that can sometimes leave you stuck in a spot. Every Entrepreneur must know that the basic steps towards success should be producing revenue and coordinating the same. You should have a better understanding of the basic of money management skills that include the understanding of credit, Tax Deducted forms and much more. Sometimes the most tough part of managing a business for entrepreneurs is the selection of proper Business software.
Whenever it comes to tax many questions will strike in mind like how much you have pay and why? and various distinct measures to save it. Tax is a money which is collected by the central government or state government or jointly for providing public services, it may be directly or indirectly.
The tax rate is directly proportional to the capital. The Greater the tax rate, the more capital is withdrawn from the hands of the entrepreneurs and into the hands of the government.
Types of Tax:-
Direct tax: Direct tax is a tax that is directly paid by the persons to the government such as income tax, corporation tax and wealth tax.
Indirect tax: Indirect tax is a tax that is not directly paid by the person which is shown in daily routines such as sales tax, VAT tax, customs duty and many more.
Taxes Paid By Entrepreneurs:-
An Entrepreneurs pays tax according to its business activities. The rates of taxes will be different, it is rely upon the states you do business in and where your business situated. Types of taxes that Entrepreneurs should concern:-
- Income Tax:- A income tax is a tax that is enforced on financial income produced by all entities within their jurisdictions. The government takes Income tax as a key source of funds and uses to funds its activities and serve the public.
- Sales Tax:- Sales taxes are enforced on merchandise purchased by consumers and are imposed by federal, state and local governor. The categories of stuff and services that are imposed on sales tax depending on the city, state and country.
- Payroll Tax:-Taxes that are imposed on employees or employers are payroll taxes. Payroll Taxes are generally calculated as a percentage of employee’s wages that employers pay their Crew.
- VAT tax:- A value-added tax imposed on the purchase of goods and services. It is a type of Consumption tax. It includes sales tax, excise, tariff and other taxes on consumer goods and services.
- Gross Receipt Tax:- The gross receipt tax is a percentage of revenue paid by the wholesaler to the state which ultimately impacts your profit and loss statements.
- Goods and Services Tax: GST is a type of value added tax that is imposed on goods and services paid by the entrepreneurs for selling the goods and services. GST online accounting software free serve as a backbone to handle GST operations in an organization.
Taxes Issues For Entrepreneurs:-
- A form of Entrepreneurs: Taxes depends upon the form of Entrepreneurs that a businessman must keep in mind before start its business and they also consider the taxation effect on their form such as sole- proprietorship, Partnership firm, Limited Liabilities Corporation and NPO (Non Profit Organisation) etc
- Sole-Proprietorship: A corporation possessed and handled by a single person who is personally responsible for all debts and obligations.
- Partnership firm: Two or more people contribute to the ownership of one corporation.
- Limited Liability Corporation: A nearly new, hybrid type of judicial structure that provides the limited liabilities features of a business and the tax abilities and operational flexibility of a partnership firm.
- Non profit organization: A corporation committed in the task of public or private interest that are inspired by making a profit. Some nonprofits are free from paying federal taxes.
- Nature of the Business: Taxation is different according to their business activities such as tax imposed on alcohol and tobacco business is more as compared to normal business activities. An Entrepreneurs pay tax according to its business activities.
- Area of Business: Taxes may vary with areas, it is because of taxes imposed by the state government or subsidies given by the state government or central government in such areas such as SEZ (Special Economic Zone). Special Economic Zone is particularly defined duty-free enclave and shall be considered to be foreign territory for the objective of trade transaction and duties and tariffs.
- Taxation Effect of other Business: Entrepreneurs also depend on the tax imposed on other business which is directly related to its business such as a raw material purchase from one state is different from others state.
- Capital Of Business: Capital is the asset or wealth required to invent goods and Services. Capital also affects the taxation such as introduce small capital by entrepreneurs affect less tax and large business may be high. The capital is directly proportional to tax rates. The higher the tax rate more capital is paid by entrepreneurs to the government.