Determine what type of Tax Year (Calendar Year or Fiscal Year) you will utilize for your annual accounting period for keeping records and reporting income and expenses. For more information on the different types of Tax Years, visit https://www.sba.gov/business-guide/manage-your-business/pay-taxes The City of Elgin and/or Kane County may require their own taxes in addition to the State and Federal taxes for which you will be responsible. Contact the City of Elgin (cityofelgin.org) and Kane County Local Revenue Department (countyofkane.org) to determine if additional taxes will apply to your business.
The State of Illinois will also require you to pay Business or Corporate Income Tax, depending on the structure of your business. To review specific requirements, visit www.sba.gov/content/learn-about-your-state-and-local-tax-obligations. What type of business will you be operating? The type of business will determine the taxes for which you will be responsible and how they need to be paid. General types of taxes include:
Income Tax. All business are required to pay federal income taxes and file a return.
Self-Employment Tax. Social Security and Medicare Tax for individuals who work for themselves.
Employment Tax. If you have employees, you will have to pay certain employment taxes:
- Social Security and Medicare
- Federal Income Tax Withholding
- Federal Unemployment Excise Tax. Depending on the products you sell or manufacture, the type of business you operate, equipment or facilities used, or payments you receive for certain services, Excise Taxes may pertain to you. Refer to www.irs.gov for more information.
Is your business eligible for Sales and Property Tax Exemptions?
Certain organizations may be exempt from paying sales tax in the State of Illinois. Your business may be allowed to buy items tax-free, and your property
may be exempt from property taxes. For more information about determining your business’ eligibility, visit https://www2.illinois.gov/rev/forms/reg/Pages/stax-1.aspx
Your business could also qualify for Federal Tax Exemptions: irs.gov/Charities-&-Non-Profits/Frequently-Asked-Questions-About-Applying-for-Tax-Exemption.