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A/ TAX
When you own a business, paying
taxes becomes even more of a chore. As a business owner, you become
an agent of the government, collecting and submitting taxes due from
yourself, your corporation and your employees.
Payroll Taxes
Withholding taxes
Employers are responsible for
withholding taxes from employees’ paychecks, sending them to the
proper government agencies, and other employer tax obligations. The
major employer paid taxes (FICA, federal unemployment, and state
unemployment taxes) will be explained later in this section.
Social Security
and Medicare Taxes
The Federal Insurance
Contributions Act (FICA) provides for a federal system of old-age,
survivors, disability, and hospital insurance. The first three are
financed by the social security tax, while hospital insurance is
financed by the Medicare tax. To learn more about the five major
benefits covered by Social Security taxes (retirement, disability,
family benefits, survivors and Medicare), please refer to the Social
Security Administration’s Web site.
Employers must withhold social
security and Medicare taxes from employees’ wages and pay a matching
amount. These taxes have different rates and only the social
security tax has a wage base limit. There is no wage base limit for
Medicare tax – all covered wages are subject to Medicare tax.
Federal
Unemployment Tax
The Federal Unemployment Tax
Act (FUTA), together with state unemployment systems, provides for
payments of unemployment compensation to workers who have lost their
jobs. Most employers pay both a federal and a state unemployment
tax. Only the employer pays a FUTA tax. It is not deducted from the
employee’s wages.
Generally, employers can take a
credit against FUTA tax for amounts paid into state unemployment
funds. This credit cannot be more than 5.4% of taxable wages. Those
entitled to the maximum 5.4% credit have an effective FUTA tax rate
of 0.8% after the credit. The IRS has tests to determine whether a
particular business must pay FUTA tax.
State
Unemployment Tax
State unemployment taxes are
also paid by the employer and are not deducted from the employee’s
wages. Each state has a different rate and different wage limits
from which the taxes are calculated.
Federal
Income Tax
Different business structures
(sole proprietorship, partnership, corporation, or limited liability
company) have different income tax requirements regarding filing
dates, forms required, and tax rates and calculations. The IRS lists
the various business taxes and forms required for each legal
structure.
Federal income tax is a
pay-as-you-go tax. Business owners generally pay income taxes in
quarterly estimated income tax payments. For more information on
estimated income tax payments, refer to IRS Publication 505, Tax
Withholding and Estimated Tax.
State Income Tax
In addition to federal income
tax, business owners also have to pay state income tax. In the fact,
business owners in California are among the most highly taxed in the
US, making them less competitive in business and industry.
Self-Employment Tax
Self-employment tax is a social
security and Medicare tax for individuals who work for themselves,
similar to social security and Medicare taxes withheld from the pay
of wage earners. Social security benefits are available to
self-employed persons just as they are to wage earners. Like federal
income tax, self-employment taxes are paid through quarterly
estimated tax payments. For more detailed information on
self-employment tax, refer to IRS Publication 533, Self-employment
Tax.
Other
taxes
Use tax
Use tax is a type of excise tax
levied in the United States. It is assessed upon "tax free" tangible
personal property purchased by a resident of the state for use,
storage or consumption of goods in that state (not for resale),
regardless of where the purchase took place. The use tax is
typically assessed at the same rate as the sales tax that would have
been owed (if any) had the same goods been purchased in the state of
residence. Typical "tax free" purchases that require payment of use
tax include those done while traveling (for things carried or sent
home), through mail order, or purchases via telephone or internet.
Sales
tax
A sales tax is a state or
locality imposed percentage tax on the selling or renting of certain
property or services. The fraction of the total taxes collected as
sales tax typically varies form about 25% to 50% of government
revenue. Nearly all sales taxes have a large list of goods and
services, varying from state to state, that the tax is not collected
on. Because the tax is collected from the customer, it is a
consumption tax. In the United States, it is nearly always
explicitly added on and not included in the price. If a person
purchases property from an out-of-state seller, sales tax is not
due, but rather the customer may owe a so-called use tax. For
example, if a person purchases a computer from a local
brick-and-mortar retail store, the store will charge the state's
sales tax. However, if that person purchases a computer over the
internet or from an out-of-state mail-order seller, sales tax may
not apply to the sale, but the person could possibly owe a use tax
on the purchase. Because of exclusions on what is taxed and not
taxed the typical consumer will pay on average about 1/3 of the
listed sales tax on all his/her expenditures, i.e. a 7.5% tax will
collect on average about 2.5% of a persons income. The sales tax
revenues are typically split into several fractions going to the
state, schools, counties, cities, public transit and possibly other
jurisdictions. The size and split of these fractions vary
significantly from state to state except in the states that do not
have a sales tax. Additional taxes like Hotel tax, Rental car use
fee, etc. that are really disguised sales taxes are imposed
typically on non voting visitors to a given location.
Electronic Waste
Recycling Fee
The Electronic Waste Recycling
Fee is imposed on the consumer and collected by the retailer, at the
time of the retail sale or lease of certain new or refurbished
televisions, computer monitors, laptop computers, and other devices.
This fee is administered by the Electronic Waste Recycling Fee
Section.
Environmental
Fees
Environmental Fees includes the
Ballast Water Management Fee; Hazardous Substances Programs; and
Occupational Lead Poisoning Prevention Fee.
Excise
Taxes
Excise Taxes include the
Alcoholic Beverage Tax; Alternative Cigarette Tax Stamp Program
(ACTS); California Cigarette and Tobacco Products Licensing Act of
2003; California Tire Fee; Cigarette & Tobacco Products Taxes;
Emergency Telephone Users Surcharge; Energy Resources Surcharge;
Integrated Waste Management Fee; Natural Gas Surcharge; and Tax on
Insurers.
Fuel Taxes
Fuel Taxes include the Aircraft
Jet Fuel Tax; Childhood Lead Poisoning Prevention Fee; Diesel Fuel
Tax; International Fuel Tax Agreement (IFTA); Interstate User Diesel
Fuel Tax; Motor Vehicle Fuel Tax; Oil Spill Response, Prevention and
Administration Fees; Underground Storage Tank Maintenance Fee; and
the Use Fuel Tax.
B/ NON-DISCLOSURE AGREEMENT
A Non-Disclosure Agreement (NDA), also
called a confidential disclosure agreement (CDA), confidentiality
agreement or secrecy agreement, is a legal contract between at least
two parties, which outlines confidential materials that the parties
wish to share with one another for certain purposes, but wish to
restrict from generalized use. In other words, it is a contract
through which the parties agree not to disclose information covered
by the agreement. A NDA creates a confidential relationship between
the parties.
NDAs can be used to protect any type of
intellectual property or trade secret. As such, an NDA can protect
non-public business information, know-how, patent-pending
inventions, unpatented yet patentable inventions, unpatentable
ideas, or copyrighted software. For instance, a script for a
high-profile film that is still in production could be the subject
of an NDA.
NDAs are commonly signed when two companies or
individuals are considering doing business together and need to
understand the technology or processes used in one another's
businesses solely for the purpose of evaluating the potential
business relationship. NDAs can be "mutual", meaning both parties
are restricted in their use of the materials provided, or they can
only restrict a single party.
It is also possible for an employee to sign an
NDA or NDA-like agreement with a company at the time of hiring. In
fact, some employment agreements will include a clause restricting
"confidential information" in general.
C/ BUSINESS LAWS
Complying with business laws
and regulations can be a burden on small businesses. This booklet’s
resources are designed to provide legal and regulatory information
to America's small businesses.
Laws and regulations affect
every aspect of business strategy. As a result, topics covered on
this booklet range from the most basic and crucial, such as choosing
a business structure and so on. The booklet also acts as a gateway
to federal, state and local information that affects small
businesses. One of the main reasons why small businesses fail is
because they do not seek legal help at critical development stages.
It is imperative, therefore, to learn more about the legal aspects
of starting and running a business.
The
information on this site is not intended to constitute legal advice
or to substitute for obtaining legal advice from an attorney
licensed in your state. This web site is not intended to be
advertising under applicable laws and ethical rules. These
materials have been prepared by the French American Chamber of
Commerce with the expertise of our staff and members for
informational purposes only and are not legal advice. Anyone
viewing the information should not act upon it without seeking
professional counsel. The information contained in this website is
provided only as general information which may or may not reflect
the most current legal developments.
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