Guide to Starting and Operating a Small Business | 2018 Guide to Starting and Operating a Small Business - Page 31

Personal Income Tax As a sole proprietor or partner, the owner pays taxes on the income from the business on a personal income tax return with the state and federal governments. You will also file an additional schedule that identifies income and expenses of the business. Partners file a partnership return in addition to the personal income tax return that distributes profits and losses between the partners according to the partnership agreement. Corporations pay taxes on the business income at corporate tax rates. Shareholders and employees (including paid corporate officers) pay individual income tax on any salary and dividends received from the corporation. Most businesses are also required to make “Estimated Tax” payments on a quarterly basis for Michigan income tax, federal income tax and self-employment tax. For more information about your tax obligations and the proper forms, contact the Michigan Department of Treasury at 517.636-4486 for state taxes and the IRS at 800.829.4933 or online at www.irs.gov for federal taxes. State Business Taxes Michigan Treasury Online (MTO) houses the e-Registration process for businesses, which is easy, secure, convenient and faster than registering by mail. At the MTO you can also register with the Unemployment Insurance Agency (UIA) for unemployment tax for the following Michigan business taxes: • Corporate Income Tax • Flow-Through Withholding • International Fuel Tax Agreement (IFTA) • Motor Fuel • Sales • Use • Withholding • Tobacco Michigan Treasury Online (MTO) provides registered businesses the ability to access, view and make changes to account specific information that Treasury has captured from their application. The MTO self-service tool is intended to improve taxpayers’ convenience and efficiency when notifying Michigan Treasury of routine account changes. A registered business can now access its account information and submit account specific changes via MTO in lieu of sending a form. The new MTO self-service tool is easy to access, easy to navigate and is available 24/7, only through the Michigan Treasury Online website at: https://mto.treasury.michigan.gov MTO also allows businesses to authorize others to access account information. A business can delegate access to account information to the appropriate staff or outside representative if desired. The Michigan Treasury Online website is located at https://mto.treasury.michigan.gov or you can call the Michigan Department of Treasury at 517.636.6925. For more information on the various State of Michigan taxes, visit the Michigan website at: www.michigan.gov/ businesstaxes. To download and print a pdf copy of “Michigan Business Taxes Registration Booklet” including mail filing forms, go to www.michigan.gov/documents/518_3620_7.pdf Sales, Use and Withholding Taxes Anyone who engages in the retail sales of tangible personal property (defined as any good that one can possess or exchange) from a Michigan location needs a sales tax license. The Michigan sales tax is 6 percent of retail sales receipts (at time of publication). Local governments cannot levy sales tax in Michigan. • When selling or leasing tangible personal property to a Michigan customer from an out-of-state location and when the business has no retail location in Michigan, one must register for use tax, which is also 6 percent (at time of publication). • When liable for sales, use or withholding tax, the business should register online for taxes at: https://mto.treasury.michigan.gov, the Michigan Treasury Online website; or by paper registration as 29