| A partnership agreement is made between two or | | | | taxes and Security and Medicare taxes. To fulfill |
| more partners, who mutually agree to set-up a | | | | withholding tax obligations, employers must deduct |
| business or become a part of it after the business | | | | taxes from their employees' salaries and send the |
| takes off. All the parties entering a partnership deed | | | | amount to the authorized government agencies. |
| become the owners of the company, and hold the | | | | Security and Medicare taxes are deducted by the |
| power of decision-making. The deed specifies the | | | | employers' from their employees' salaries. In this case, |
| mode of profit sharing, disputes solving, admission of | | | | the employers however have to pay an equivalent |
| other partners into the company in future, and various | | | | amount to the government. |
| other related issues. In a partnership business, the | | | | Employer Paid Taxes; |
| business and its owners are treated as the same | | | | These taxes are paid by the employer and are not |
| entity by the law. | | | | deducted from the employees' wages. Three major |
| Partnership agreements are easy to establish, but | | | | employer paid taxes are Federal Unemployment Tax |
| need absolute adherence to tax rules from the | | | | (FUT), State Unemployment Tax (SUT), and Federal |
| owners' side. Most people entering into partnership | | | | Income Tax (FIT). The first two taxes are applicable |
| deeds are relatively new in business and lose the track | | | | for most of the employers and are charged to them |
| of legalities that need to be fulfilled for a hassle-free | | | | at different rates. Amount of Federal Income tax |
| operation of the firm. This article aims at educating | | | | payable by the employers depends on the nature of |
| such owners about some basic tax rules that must be | | | | their businesses and business structures (whether the |
| adhered to avoid troubles for the firm and themselves | | | | company is established as partnership, proprietorship, |
| in future. Whether the firm is a General Partnership | | | | corporation or it is limited). |
| firm, Limited Partnership firm, or a Joint Venture, | | | | Besides, there is a different category of taxes |
| adherence to tax rules is necessary. | | | | applicable for retail sales and particular services: Sales |
| These taxes are broadly classified into two category | | | | and Use tax. The businessmen add such taxes to the |
| Payroll taxes and Employer Paid taxes. Payroll taxes | | | | cost of products or services that they sell. The |
| are deducted by the employer from the employees' | | | | businessmen collect such taxes from the customers |
| salaries and Employer Paid taxes are directly paid by | | | | upon selling goods to them and then hand the amount |
| the employer. | | | | collected to the authorized government agencies. |
| There are two major Payroll Taxes: Payroll taxes and | | | | Manufacturers and wholesalers are exempt from such |
| Social Security and Medicare taxes. | | | | taxes; only the distributors collect such taxes from the |
| Payroll Taxes; | | | | customers. |
| There are two types of payroll taxes - Withholding | | | | |