USA Tax Guidelines for Business Owners

Taxes are the primary source of income for the government of the USA. Finance officers estimated that the USA is going to generate a revenue of $3.71 trillion in this fiscal year. Taxes serve income to the treasure of a country and helps in its development.

Contributing a part of income towards their nation’s development is the responsibility of every citizen and business. The government of the USA uses these taxes to provide facilities, assisting businesses, developing infrastructure, helping unadopted, and a lot more. Being an entrepreneur, you might be paying taxes or have the courage to know about USA taxation criteria to start a business. USA taxation law is a wide concept and consists of various policies, rules, regulations, acts, etc. From all these, some concepts are there that every business owner needs to know.

Following are USA Tax guidelines for business owners:

  1. Employer Identification Number:

EIN (Employer Identification Number) is one of the essential aspects to consider for starting a business in the USA. It is a unique identity of the business that makes it eligible to hire employees and initiate tax benefits. A company has to prepare this document to be identical to the IRS (Internal Revenue Services). The purpose of preparing EIN is to report taxes and make the company identical to the government. Do not confuse with EIN and TIN (Tax Identification Number). Both are the same thing. However, it is different from the SSN (Social Security Number). SSN identifies the ordinary residence of the country, whereas EIN deals with business entities in the country. Also, EIN does not include confidential information, and businesses feel comfortable to share it over the interment.

  • Employment Taxes:

Whether you are running a small-scale business or an MNC (Multi-National Corporation), you have to employ employees for efficient working. An employer’s work does not end with hiring an employee and giving him a salary according to his work. He also has to face various employment taxes imposed by the USA government. Three major employment taxes are there that must be considered by an employer before hiring employees. Social Security, Federal Income tax withholding, and federal unemployment tax (FUTA) are three taxes that fall under the category of employment tax. FUTA is the most important tax among the three of them that deals with unemployment benefits. In this, an employer is liable to state workers’ compensation insurance, unemployment insurance taxes, and a lot more after terminating an employee from the job. A businessman must know employment taxes for better human resource management in his company.

  • Provisions for work from home:

COVID-19 has created a new trend of work from home in which employees prefer working at their homes to prevent themselves from coronavirus. Remote working may reduce traveling expenses but has increased home office expenses such as rent, electricity bills, etc. Either you are running your business from home, or you permitted your employees to do work from home, some tax deductions are there that must be considered for efficient working. IRS (Internal Revenue Services) allows you to write off $5 per sq. ft. of your home office. This amount can reach up to an amount of $1500 and an area of up to 300 square feet. Although, IRS has a provision regarding these tax benefits. You cannot use home office equipment for your personal use. For instance, your kids should not be watching a cartoon on the TV in-home office.

  • Car use for business:

A car may be a multi-purpose vehicle and you can use it for professional as well as personal purposes. However, using a vehicle, especially a car for work-related purposes has a lot of tax benefits for a business. A company can write off costs associated with fueling, repairing, and maintaining the car. In case you are using the car also for personal purposes along with professional ones, you can still apply for deductions for the cost associated with professional expenses. According to IRS, you can claim up to $0.54 per mile the car driven for professional purposes. It means if you have driven the car 10 miles for delivery, then you can claim a deduction of $5.4 from the total incurred by you.

  • Other provisions:

Besides the provisions discussed above, many other provisions are also there that must be considered before starting a business. IRS allows businessmen to deduct costs associated with business insurance, business meals, travel expenses, bank fees, etc. A businessman can also file a refund for phone and internet expenses. He can write off and claim 50% of internet expenses. In depreciation, you can write off the cost associated with big-ticket assets and reimburse lifetime expenses. Charitable donations can also be written off and deducted for saving tax. Like this, you can deduct a variety of direct and indirect expenses and reimburse the amount legally.


Taxes means the part of income a businessman pays to the government for the services they provide. Being a responsible citizen, every businessman has to contribute a part of his income towards the nation’s development. The government of the USA uses tax revenues to develop the country and facilitating residents with all the necessary services. Taxes might play a crucial role in filling the treasures of the country. However, it is an expense to the business. Businesses have to pay thousands of dollars as a tax amount for running their operations legally. IRS has specific guidelines for business owners according to which they can save their income from taxes and legally initiate their business working. So, if you want to start a business in the USA, I suggest you should read the above-mentioned guideline carefully for a better understanding. Visit: UBOS


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