When most people think about taxes, they think about April 15. For business owners, however, tax obligations don’t end when the annual return is filed. Whether you’re running a small retail store in Jamestown, managing a construction company, or operating a service business anywhere in Western New York, taxes are part of doing business year-round.
Understanding these different taxes can help you avoid surprises, reduce penalties, and identify opportunities to save money.
Self-Employment Taxes
If you’re self-employed, you pay both the employer and employee portions of Social Security and Medicare taxes. This is known as self-employment tax and applies to sole proprietors, many LLC owners, and independent contractors.
Ways to Reduce the Impact
As your business grows, it may make sense to explore whether an S Corporation election could provide tax savings. While this strategy isn’t right for every business, it can reduce self-employment taxes in certain situations.
Before making any changes, it’s important to review your specific circumstances with a tax professional.
Payroll Taxes
Once you hire employees, your tax responsibilities expand significantly. Employers must withhold federal income tax, Social Security, Medicare, and New York State income tax from employee wages. In addition, employers must contribute their share of Social Security and Medicare taxes.
Ways to Reduce the Impact
Proper payroll administration is critical. Certain tax credits and incentive programs may be available depending on your workforce and industry. It’s also important to correctly classify workers as employees or independent contractors to avoid costly penalties.
Federal and New York Unemployment Taxes
Employers are generally responsible for both Federal Unemployment Tax (FUTA) and New York State Unemployment Insurance contributions.
New York unemployment rates vary based on factors such as industry and claims history. Businesses with frequent employee turnover may see higher rates over time.
Ways to Reduce the Impact
Maintaining stable staffing levels and responding promptly to unemployment claims can help keep rates lower. It’s also wise to review unemployment notices regularly to ensure they are accurate.
New York Sales Tax
Many businesses are required to collect and remit New York sales tax. This includes retailers, restaurants, contractors in certain situations, and some service providers.
Because sales tax rules can be complex, especially when exemptions are involved, mistakes can lead to costly assessments during an audit.
Ways to Reduce the Impact
Keep detailed records of exempt sales and resale certificates. Make sure you’re charging the correct rate and filing returns on time. Businesses operating online should also understand New York’s sales tax requirements for remote sales.
Property Taxes
Property taxes affect many Western New York business owners. Taxes may apply to commercial real estate, rental properties, and other business-owned property.
Unlike some states, New York generally does not impose a statewide business personal property tax on equipment and furniture in the same way many other states do. However, real property taxes can represent a significant expense.
Ways to Reduce the Impact
Review assessment notices carefully and challenge valuations when appropriate. Many property owners pay more than necessary simply because assessments are never reviewed.
The Importance of Year-Round Tax Planning
The most successful business owners don’t think about taxes once a year—they think about them throughout the year.
Regular tax planning can help you:
• Improve cash flow
• Avoid penalties and interest
• Reduce unexpected tax bills
• Identify deductions and credits
• Make better business decisions
If you’re unsure whether you’re paying more tax than necessary, a mid-year review can often uncover opportunities before it’s too late to act.
Need a consultation?
At Gleason Tax Advisory, we help Western New York business owners stay compliant while looking for practical ways to reduce their overall tax burden.
