Brief #10.07
8/2013
Southern Ohio Chapters
Federal, State and Local Taxes & Reports
(For Businesses with and without Employees)
This Brief is intended to be a general guide to help you through the maze of rules and regulations
you face in starting and operating a business. It does not provide complete information on all
federal, state and local tax laws that may affect your particular business, but provides a general
overview as a starting point. It does not cover detailed specifics because the circumstances under
which individual business owners operate vary greatly and often determine what types of taxes
must be paid (e.g. legal structure, exemptions, deductions, with/without employees, etc.). Instead,
cited herein are federal, state and local sources and documents that you should use as guidance in
meeting your tax obligations.
Tax laws and regulations are extremely difficult for the average person to interpret, and, to make
it more complicated, they are in a state of continual change. The assistance of an accountant
and/or attorney, while contributing to increased overhead, may prove to be the best overhead
money you will ever spend because, in the long run, they will probably save considerable money
and concern.
Many business operators attempt to install their record keeping systems without examining and
understanding the tax forms they need to complete during and at the end of the year. This is a
major error for two reasons: a failure to account for the necessary financial information required
by government agencies, and a failure to devise a system which will help them analyze their
business in order to keep on track financially.
Federal Taxes
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Requirements: You may need to report for Federal purposes the following:
o Self- employment income from sales and service
o Estimated Income and Payroll Taxes
o Social Security and Medicare income and taxes.
o Unemployment taxes
o Hiring of Independent Contractors.
o Verification of U.S. Citizenship of Employees
o Tax Exemptions for withholding taxes from Employees
 The IRS has forms and schedules for each of the above requirements. There
are instructions and explanations accompanying each which you should
read, and understand how they may apply to you.
Federal Tax Publications: IRS Pub 334 – Tax Guide for Small Business is an essential introduction
to federal business taxes.
http://www.irs.gov/uac/Publication-334,-Tax-Guide-for-Small-Business-%28For-Individuals-WhoUse-Schedule-C-or-C-EZ%29
On the panel, link to “Other Publications related to Publication 334” to access:
IRS Pub 15 – Employer’s Tax Guide – calculating, reporting, paying employee taxes
©2013 SCORE Ohio, Brief Number 10.07, Revised 8/2013
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IRS Pub 334 – Small Business Guide – key resource: accounting methods, tax liabilities
IRS Pub 463 – Travel, Entertainment, and Auto Expense Guide
IRS Pub 505 – Tax Withholding and Estimated Tax – required reporting
IRS Pub 533 – Self-Employment Tax-Social Security/Medicare on self-employed income
IRS Pub 535 – Business Expenses – deductible/non-deductible (start-up costs)
IRS Pub 587 – Business Use of Home – how to calculate the deduction
IRS Pub 946 – How to Depreciate Property
…for tax guidance on how these and other topics apply to your business
Federal Tax Forms
On the panel, link to “Forms Related to Publication 334”, to access:
IRS Form 940 – Federal Unemployment Tax Return
IRS Form 941 – Quarterly Federal Income/Social Security/Medicare taxes
IRS Form 1040 – Individual Income Tax - on the panel, link to “Forms and Schedules for
Form 1040, then link to Schedule C – Profit or Loss from Business for the tax return and
instructions on how to file
IRS Form 1096 – annual report of all Form1099-MISC payments
IRS Form 1099-MISC – to report payments to independent contractors
…for these and other tax forms you will need to keep your business in tax compliance
State Taxes
Requirements: State and local tax compliance is complex, involving:
 Personal income tax – applied to payroll
 Municipal/school district income taxes – applied to payroll
 Commercial activity/Business receipts/income tax
 Unemployment insurance tax
 Workers’ compensation insurance tax
 Sales and use tax/vendor’s license
 County property tax
Each state tax department has a one-stop gateway to information about applicable taxes and rates,
forms and filing requirements.
Ohio http://www.tax.ohio.gov/
Kentucky http://revenue.ky.gov/
Indiana http://www.in.gov/dor/index.htm
Local Taxes
City of Cincinnati:
• Earnings tax, currently a 2.1% rate, must be paid both by business located in the city and their workers.
http://www.cincinnati-oh.gov/finance/income-taxes/
City of Dayton:
• Earnings tax, currently a 2.25% rate, must be paid both by business located in the city and their workers.
http://www.cityofdayton.org/departments/finance/Pages/TaxForms.aspx
Other municipalities, counties, and townships where businesses are operating may have their own taxing
requirements, which may be pertinent to your income or operation. Check with the applicable government.
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Disclaimer
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product, process or service does not constitute or imply an endorsement by SCORE or SBA or
SCORE Chapter 34 or the United States Government of the product, process, or service or its
©2013 SCORE Ohio, Brief Number 10.07, Revised 8/2013
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