The amount of tax a small business in California pays can vary based on several factors such as business type, size, revenue, and location. California imposes various taxes on businesses, including the state income tax, sales and use tax, employment taxes, and more. Here are some common taxes that small businesses typically pay in California:
- State Income Tax: California has a progressive income tax system, ranging from 1% to 13.3%. Small businesses that are structured as pass-through entities, such as sole proprietorships, partnerships, and S corporations, pass their income through to the owners' personal tax returns.
- Franchise Tax: In addition to the state income tax, California imposes a franchise tax on all corporations, even if they have no taxable income. The minimum franchise tax is $800 per year.
- Sales and Use Tax: Businesses that sell tangible goods or some specific services are required to collect sales tax from their customers and remit it to the state. The current base sales tax rate in California is 7.25%, but it can be higher depending on additional local district taxes.
- Employment Taxes: Employers in California must pay various employment taxes, including the State Unemployment Insurance (SUI) tax, Employment Training Tax (ETT), and Disability Insurance (DI) tax.
It is important to note that the specific amount of tax a business pays can depend on their specific circumstances and deductions applicable to them. It is always recommended to consult a tax professional or CPA for accurate and personalized advice.