Many business owners with commercial property think that property tax is the only tax. This is the case with residential property, but commercial properties have other rules, require other taxes. So, if you’re planning on starting your own business and you are doing some projecting of funds, be sure to know all the taxes coming your way.
There’s a good chance the county will levy taxes on your commercial property. This is similar to taxes on residential properties, and you are obligated to pay it. Consider it when you consider your monthly rent payments.
Federal Income Taxes
Federal income taxes must be paid on income from your commercial property. For example, tax must be paid on a resident’s rent. However, tax is only paid on the profits. Security deposits do not have to be claimed as income, as they can be used for repairs.
State Income Tax
If your state taxes businesses, you will have to pay income tax on your commercial property income. Count state taxes as one of your expenses when determining your commercial property’s rent. Same rules apply as federal income tax (only profitable income).
Some localities will require a local tax. Know what this tax is and factor it into your projected payments. Don’t let this one slip by.
Don’t be in the dark with this kind of stuff. Unpredicted payments and taxes can ruin a business. Knowing what taxes will affect you is keeping you one step ahead, and limits any sudden, debilitating losses. Often times it will be that a new business forgot to check all possible taxes, and suddenly they have hundreds more to spend, or maybe don’t quite know how to use taxes most efficiently.