Milwaukee Small Business Tax Information - Small Business Milwaukee

Small Biz MKE

Taxes for Small Businesses

Don’t Let Taxes Trip You Up—Start with the Basics

Taxes can feel overwhelming—but understanding your responsibilities doesn’t have to be stressful. Whether you’re just getting started or looking to stay better organized, having a clear grasp of small business tax basics can help you avoid costly surprises and stay compliant. This page gives you a helpful overview of the types of taxes small business owners need to understand—like income, self-employment, sales, and payroll taxes. We break down what each one means, why it matters, and how it applies to your business.

We’ve also created additional pages that take you on a deeper dive into key tax-related topics. You can explore those topics by following the links below:

- - Choosing the Right Business Structure – Understand how different structures affect your tax obligations.
  - Essential Tax Deductions – Discover the most common deductions small business owners can claim.
  - Estimated Taxes & Filing Deadlines – Stay ahead of key dates and avoid penalties.
  - Recordkeeping & Documentation Tips – Learn how to keep your financials organized for tax time.
  - When to Hire a Tax Professional – Know when it’s time to bring in expert guidance.

Types of Taxes Small Businesses Need to Know

When you’re running a small business, staying on top of your tax responsibilities is essential to avoid penalties and ensure compliance. Depending on your business structure, location, and whether you have employees, you may need to handle several types of taxes. Below is a quick overview of the most common types of taxes small businesses should be aware of, along with links to trusted sources for more information.

1. Income Tax

Income tax is applied to your business’s profits after deducting expenses. The way your income is taxed depends on your legal structure:

Sole Proprietorships and Partnerships: Report business income on personal tax returns.
LLCs: Can choose to be taxed as a sole proprietorship, partnership, or corporation.
S Corporations and C Corporations: Have different tax structures and rates.

Learn more about business income taxes from the IRS.

2. Self-Employment Tax

If you’re a sole proprietor, freelancer, or independent contractor, you’re responsible for paying self-employment taxes. These taxes cover contributions to Social Security and Medicare that would otherwise be withheld by an employer. As of 2024, the self-employment tax rate is 15.3%, split between Social Security (12.4%) and Medicare (2.9%).

Understand self-employment tax requirements on the IRS website.

3. Payroll/Employment Taxes

If your business has employees, you’ll need to withhold and pay federal and state payroll taxes on their wages. This includes:

Federal Income Tax Withholding: Based on employees’ W-4 forms.
Social Security and Medicare Taxes (FICA): Matched by the employer.
Unemployment Taxes (FUTA and SUTA): Paid by employers to provide unemployment benefits.

Get details about employer tax responsibilities on the IRS Employer’s Guide.

4. Sales Tax

If your business sells goods or services, you may be required to collect sales tax based on your state’s regulations. Sales tax laws vary widely by state, and recent changes to nexus laws may require online sellers to collect sales tax in multiple states. Be sure to check with your state’s Department of Revenue to determine your obligations.

Find state-specific sales tax information through the SBA.

5. Property Tax

If your business owns real estate, you’ll need to pay property taxes based on the assessed value of the property. Property taxes are typically assessed by local governments and can vary by location. In some cases, personal property used for business (such as equipment or machinery) may also be subject to property taxes.

Discover more information here: State of Wisconsin, Department of Revenue, Property Tax