The start of the New Year ushers in a new opportunity to upgrade your car wash business strategy. But it is also the best time to review and create tax payment reminders. Make sure all your car wash business taxes payments are up to date and you have kept the deadlines.
The first quarter of every year is a busy season where all car wash business owners and accountants comb their way through spreadsheets, invoices and other documents. Indeed, it can be time consuming and nerve wracking. Here is a list of things to help you go through the busy car wash business taxes season with ease.
Filing Car Wash Business Taxes
The IRS.gov offers online forms and applications. Online filing is now available to business owners for more convenient processing. Before anything else, you need to remember that various business structures would mean variations in the types of tax payment requirements. A sole proprietorship car wash business has different tax liabilities and requirements compared to car wash business partnerships and corporations.
Income Tax
Your car wash business, just like all types of businesses except partnerships, must file for an annual income tax return. You have to pay them before April 15 of the coming year. Currently, there are electronic payment options available. These include options such as credit or debit card payment, direct pay, or electronic funds withdrawal, etc.
Self Employment Tax
This is tax (Social Security and Medicare) intended for people who work for themselves. It includes sole proprietorship and partnership car wash business owners. According to the IRS.gov website, in general, anytime the wording “self-employment tax” appears, it only refers to Social Security and Medicare taxes and not any other tax.
Employment Tax
Maintaining a number of employees in the operation of your car wash business means you have Employment Tax responsibilities. As a business owner you are responsible to withhold the necessary tax payments from your employees and remit them to the state. These include Social Security and Medicare Taxes and Federal Income Tax Withholding. All these are due by Jan 31 of the coming year.
This assumes that at the end of the year you have already prepared the Form W-2 Wage and Tax Statement as a car wash business owner. Every employer who has something to do with trade or business who pays remuneration, including non cash payments of $600 or more for the year (all amounts of any income, social security, or Medicare tax was withheld), pays wages for services performed by an employee. Be very careful when preparing this. Withholding taxes from your employees require the use of a calculation table.
Excise Tax
If your car wash business also includes selling and manufacturing certain products, you are required to pay for excise taxes. Therefore make it a point to check with your accountant or lawyer regarding your current business structures. Expansions or changes in your business structure may require tax payment revisions.
Community Taxes/Other License Requirements
There are also state tax laws specific to your location that you need to research. Your accountant will be able to help you in these matters. Do not forget to pay your local community/county a visit to make sure your tax payments and local business registration dues are up to date. Use the internet if this becomes too difficult for you as a busy car wash business owner. Most local governments have easy access websites where all transactions and queries can be processed.
Other Car Wash Business Taxes That You Should Include in Your Calculations
Sales Tax
Your car wash business can impose sales tax, the amount of which is dependent on the state laws where your business is located. The following car wash services usually have taxes: Full Service Car Wash Businesses, Exterior Conveyor Car Wash Businesses, and Non-Coin Operated Car Wash Businesses. To explain this further, generally, car wash service companies characterized as full service need to pay sales taxes. Full service means that the services like vacuuming, interior cleaning, shampoo cleaning, window cleaning and others are done by the staff and not by an automated equipment. A car wash where the customer’s car goes into a conveyor and a personnel cleans the car or performs the services mentioned above is also a full service car wash.
Production Activity
According to a former tax attorney and now book author, Roni Deutch, “If more than 50% of your products come from the US, you are entitled to a federal tax deduction.” Of course, there would be additional paperwork, but this may be something you would like to research since it can lower down your tax dues. There are also a few states like Virginia and Vermont that offer percentage deductions from state taxes in this regard. It would be best to have a consultation with your accountant or your local government office regarding this type of tax.
Other Tax Incentives Offered by Local Government
It would be best to conduct a research regarding other options that you may include as deductible amounts in your computations. Just be sure you are equipped with the necessary paperwork and supporting documents.
Apart from spreadsheets, financial assumption of your business plan, income statements and books of accounts, preparing the files related to taxes occupy the topmost spot in the tasks that business owners loathe the most. However, it does not mean business owners should be stressed out with these matters. Consider a car wash business franchise where all aspects of the business plan, including tax payment strategies, are available in advance for you. There will still be tax calculations and tax computations but you will have your franchise partner and the whole franchise business plan to help you with the nitty gritty details. Check out our car wash franchise opportunity for a hassle-free car wash business venture that is waiting for you.
