Washington DC Business Tax Lawyer

One of the most common questions that new business owners have concern the payment of company taxes. Many wonder what the tax rate will be, whether the taxes will levy against the owner or the company, and whether they need to pay regardless of whether they turn a profit.

The fact is that determining the employment tax for a company can be a complicated question. Identifying the taxes that a company owes requires an analysis of the company’s finances and depends on the structure of the business. For instance, a partnership will pay different taxes than a corporation.

Fortunately, a Washington DC business tax lawyer is here to help. One of our experienced attorneys could explain the tax ramifications that apply when choosing the structure of your business, and our team could also take the lead in submitting appropriate tax returns to the District and federal revenue services.

How The Corporate Tax Rate Varies

Even before a company begins operations, it is necessary to select the proper business structure. The traditional option is a corporation. Here, shareholders each own a portion of the company and share the profits. Still, other options are available that offer more flexibility and tax advantages.

For example, limited liability corporations (LLCs) allow protection for most business owners from personal tax liability while still enjoying many of the same benefits as traditional corporations. LLCs pay the unincorporated franchise tax under district law. This means that any income from the LLC passes to individual members who must then pay personal taxes on the income. Similar rules apply to partnerships, sole proprietorships, and companies with partial ownership. A Washington DC attorney could provide guidance during the start-up phase by explaining the various tax implications based on the business structure.

Assisting Companies in Paying their Taxes

All companies incorporated and operating in Washington DC must pay employment taxes to both the District and federal governments. Determining the correct amount is a vital part of a company’s annual accounting. For local taxes, the Code of the District of Columbia § 47-1807.02 states that the corporate tax rate is 8.25% of all taxable income. Under no circumstances will a company with gross receipts of more than $1 million pay less than $1,000 in taxes. If a company grosses less than this amount, the minimum tax is $250.

Companies must also provide employment taxes to the District. These can include payroll taxes or unemployment insurance contributions. Working with an attorney could help companies to better understand their total tax liabilities to the District.

Federal corporate taxes also apply to companies in Washington DC. Since 2018, this rate has been 21%. However, this only applies to corporations. Companies organized under different structures must often pay their business profits as a part of personal income taxes. A Washington DC lawyer could help business owners determine their tax obligations.

It is essential to make these calculations correctly. The IRS has broad powers to punish companies that fail to pay taxes through fines and other penalties. In addition, the District has the power to conduct its own investigation that may lead to criminal punishment for tax evaders. Speaking with an attorney could help avoid these unfortunate outcomes.

Speak with a Washington DC Business Tax Attorney Today

Determining the proper amount of tax to pay is an essential part of running a company. Multiple factors play into this analysis, including the company’s structure, the amount of money it made in a particular year, and any write-offs or deductions.

Our team is here to help start-ups choose a business structure that limits potential tax liabilities and understand the potential ramifications of this choice. Contact a Washington DC business tax lawyer today to schedule a consultation.