If you are an association or a corporation, registered and running a business in the United States, then you may be required to pay Corporate Taxes. Corporate taxes are business taxes that are paid by corporations. A corporation is a separate unit from an individual and any corporation is required to pay corporate taxes separately from their owners.
Types Of Corporate Taxes
Any business or corporation may be required to pay the following types of corporate taxes:
Of the different kinds of corporate taxes, corporate income tax is the main type of corporate tax that any business has to contend with. Usually, when speaking of corporate taxes, it is the corporate income tax that most people refer to.
Determining Corporate Income Taxes
The corporate income taxes that are paid by a business will depend on the type of corporation it is. For corporate tax purposes, the federal government recognizes two types of corporations:
Federal and State Corporate Taxes
Corporations have to pay federal corporate taxes on a graduated scale (for C corporations) and at a fixed rate of 35% for S corporations. The federal corporate tax structure of the United States is what is known as a worldwide system of taxation as opposed to a territorial system. Under the worldwide system, a corporation has to pay corporate taxes, not just on its domestic income (income in the US) but also on its income earned outside the US.
Thus, if your corporation does business in the United States as well as in the UK, then you are required to pay corporate taxes on your earnings in the US, and also on your income from the UK branch. Under a territorial taxation system, a corporation is not required to pay for income earned abroad.
Apart from federal corporate taxes, businesses have to pay state corporate taxes as well. Most states in the US (apart from a few) require businesses incorporated within their state boundaries, to pay corporate taxes to the state, in addition to the ones being paid to the federal government.
Because of double taxation, federal and state taxes, and high rates of corporate tax, businesses in the United States often pay much more in corporate taxes than in other countries.
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