taxes
Definition
Taxes are mandatory payments that individuals and businesses must make to federal, state, and local governments to fund public services like roads, schools, and emergency services. As a business owner, you will owe several types of taxes including income tax on your profits, payroll taxes on your employees' wages, and possibly sales tax on products you sell.
Example
If your small bakery earns $80,000 in profit this year, the IRS expects you to pay a percentage of that amount as federal income tax, and your state government likely wants a cut as well.
Watch Out
Missing tax deadlines or failing to set aside enough money throughout the year can result in serious penalties and interest charges that stack up quickly.
See which terms appear in your contract?
This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.