What Percentage Does a Small Business Pay in Taxes

Determine Business Income: Calculate your total business income by adding all revenue from sales, services, and other sources.

[{"selector":"#anim-1884a783-130e-4e28-98e0-698a972a0949","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-c8ecdf45-3757-460b-a0c6-3a6d05814705","keyframes":{"transform":["translate3d(0px, 70.70707%, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-0336ef6d-3649-4675-9279-fb9696143856","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-e804a964-ff94-40b6-8f3d-6367beac83e9","keyframes":{"transform":["translate3d(0px, 146.50628%, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}]

Subtract Deductions: Deduct business expenses such as rent, supplies, wages, and utilities from your total income to get your net income.

[{"selector":"#anim-7cbca25a-70a1-4b3c-ab0f-ded76385b5e6","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-48808e21-0f04-48dd-9b0e-68cc98e1fc6d","keyframes":{"transform":["translate3d(0px, 70.70707%, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-98cfcea8-56c9-4f5a-8cd5-353e2a084691","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-9483da8b-e039-4cf0-b893-361d1a65ffc4","keyframes":{"transform":["translate3d(0px, 126.32097%, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}]

Apply Tax Deductions: Use applicable tax deductions like the Qualified Business Income (QBI) deduction, which allows up to a 20% deduction for eligible businesses.

[{"selector":"#anim-c7bc4c55-9102-469b-9d9b-d2f324c25b8d","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-78b1c0fd-ef2a-480a-95bd-41a610c8b2da","keyframes":{"transform":["translate3d(0px, 70.70707%, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-9a706fd0-ec79-4c14-8b39-8983067c1e88","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-9acdbee7-d875-4d0f-8102-4e2e9e874487","keyframes":{"transform":["translate3d(0px, 110.16366%, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}]

Determine Taxable Income: After applying all deductions, the remaining amount is your taxable income.

[{"selector":"#anim-d52c3104-7e69-42f3-8636-b6776786d90a","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-abdf4b6c-8d78-4f85-a98e-1f00442b2310","keyframes":{"transform":["translate3d(0px, 70.70707%, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-8876a393-c989-4b9e-8be6-c439f9873f72","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-61610d34-c5b4-46ee-9eb5-d36a840a27bb","keyframes":{"transform":["translate3d(0px, 175.44583%, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}]

Use Tax Bracket: Apply the appropriate federal tax bracket (10% to 37%) to your taxable income. If your business is a C-Corp, the flat tax rate is 21%.

[{"selector":"#anim-b8255d2b-9812-4b6e-859f-661ca3f7dc96","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-172c1472-3f0b-4d83-919a-f3563bb06099","keyframes":{"transform":["translate3d(0px, 70.70707%, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-a8d808bd-e30d-4c42-814c-5799c2d7bf21","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-412f46ed-e46d-4b6e-aa20-3bd528c2daea","keyframes":{"transform":["translate3d(0px, 126.32097%, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}]

Self-Employment Tax: Sole proprietors and LLC owners must also pay self-employment tax (15.3%) on their net earnings.

[{"selector":"#anim-da7d5cf0-952a-437b-b4b9-1aaa07b625b4","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-d2008b40-bc60-44bd-b8e4-b06eff42df0f","keyframes":{"transform":["translate3d(0px, 70.70707%, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-c49219d0-6c78-4076-a718-6b700d38ecf5","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-f5d66095-e659-4e0f-9df4-5e90804a5886","keyframes":{"transform":["translate3d(0px, 146.50628%, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}]

State and Local Taxes: Calculate state and local taxes, which vary depending on where your business operates.

[{"selector":"#anim-8e8a322e-12b8-4d29-ad34-9d64f2eb0d5e","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-484b7d52-3bb3-477c-9f92-f0af1cc46a20","keyframes":{"transform":["translate3d(0px, 70.70707%, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-986979d0-36be-445d-8a77-1ec0f89ce895","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-a7aecd86-c908-49bf-9c9c-a518da940659","keyframes":{"transform":["translate3d(0px, 175.44583%, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}]

Estimate Quarterly Taxes: If required, calculate and pay estimated quarterly taxes to avoid penalties.

[{"selector":"#anim-1f8dfe3f-12cf-4555-b00f-dd800bcb4e9e","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-1ee19e5a-3a6c-482b-bb41-5ccd9b43b4d2","keyframes":{"transform":["translate3d(0px, 58.31038%, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-c1fc496e-0ca4-42fb-8e2d-875d2528722f","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-1420286b-d127-4bd6-a463-d1f62d09927c","keyframes":{"transform":["translate3d(0px, 138.40878%, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] Enquiry Now