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Look Ahead to the Future: What Sales Tax Will Be in California in 2023? 

What Sales Tax Will Be in California in 2023

Look Ahead to the Future: What Sales Tax Will Be in California in 2023? 

December 2, 2022

What Sales Tax Will Be in California in 2023

peakreliance

Accounting, Bookkeeping, California, Taxes

California is one of the nation’s most populous states and one of the most important economic engines in the country, but it has a lot of growing pains. That’s why Peak Reliance is here to help you prepare for what lies ahead with the sales tax landscape in the Golden State in 2023. Peak Reliance is a reliable team of professionally seasoned accountants. Keep reading to get an overview of the current sales tax landscape, as well as a glimpse into what type of changes could be coming your way soon. 

What Is Sales Tax? 

If you’ve ever purchased something in California, you’ve undoubtedly paid some state sales tax. You may even have paid it twice: State sales tax is an excise tax that’s levied on the sale of goods and services. In other words, you pay it to the retailer, not the government.  

How Is Sales Tax Collected in California? 

The vast majority of states that collect sales tax use a “use tax” system, which means that the seller is responsible for collecting it and sending it to the state. In California, however, the retailer collects the tax, but they pass the cost on to the customer by charging them tax at the register. California has a “franchise tax” system, which means that the state is responsible for collecting sales tax and remitting it to the state. This is different from having “merchant-only” tax, as in other states, where the retailer does not send tax to the state. 

The Current Sales Tax Rate in California 

The California state sales tax rate is currently 7.5%. The change to this rate took effect in January 2018, when California raised its sales tax rate from 5.5% to 7.5% to “comply with a voter-approved constitutional amendment.” 

Changes to the Sales Tax Base and Rates Likely in California by 2023 

While the state sales tax rate will remain at 7.5% in California in 2023, there are a number of other factors that could change how California sales tax works in the future. In this section, we’ll explore what could change in the sales tax landscape of California in 2023, as well as how likely it is that each of these changes will occur. 

California Sales Tax Base: The sales tax base in California could expand. Currently, California only taxes certain goods, like groceries and prescriptions, and services. If California adopts a system similar to Tennessee’s, which taxes all goods, California sales tax could expand to include many more goods and services. Again, it’s unlikely to happen, but it’s something to keep an eye out for.  

California Sales Tax Rate: The current state sales tax rate in California is 7.5%. The state is unlikely to lower this rate, but it is possible that the state could increase the rate. Again, it’s unlikely and we don’t expect it to happen, but it’s worth keeping an eye out for.  

California Revenue: The adjusted gross income (AGI) threshold for California sales tax is currently $211,000. In 2023, it’s likely that California will lower the threshold, meaning that more taxpayers will be subject to sales tax. 

Other Factors: In addition to the factors listed above, there are a number of other factors that could change the sales tax landscape of California in 2023. For example, it’s possible that California will adopt a “use tax” system, which would mean that the seller would collect the tax and send it to the state. It’s also possible that California will adopt a “merchant-only” tax system, where the retailer does not have to send sales tax to the state, but the retailer collects it. Keep reading to learn more about these factors. 

Summing Up 

We’ve outlined the basics of California sales tax here, as well as some of the factors that could change the sales tax landscape in California in 2023. If you need any help with your sales taxes, Peak Reliance is there to help you. You may call us at +1 (718) 218-5558 or email at hi@peakreliance.co .  

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Sales Tax, Sales tax in California

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How Much Are California Payroll Taxes in 2022?

How Much Are California Payroll Taxes in 2022?

How Much Are California Payroll Taxes in 2022?

November 30, 2022

How Much Are California Payroll Taxes in 2022?

peakreliance

Accounting, Bookkeeping, California, Taxes

California is one of the most expensive states in which to run a business, and that’s not going to change anytime soon. The state has a complex set of laws governing payroll taxes, and they keep getting more expensive over time. In this article, we take a look at how much employers in the state need to pay payroll taxes as of 2022. We’ll explain the details about the different tax types, how they’re calculated and their effect on your business’s bottom line. 

What is a Payroll Tax? 

The terms “payroll tax” and “payroll withholding tax” are often used interchangeably. However, these two terms actually refer to two very different things. Payroll taxes are the type of taxes employers in the U.S. are required by law to deposit into an employee’s account. This includes both state and federal payroll taxes. Federal law requires employers to withhold payroll taxes from employees’ paychecks. If an employee doesn’t have a sufficient amount of money in their account to cover a certain tax, the employer is required to cover the difference. Federal payroll taxes include: – Medicare tax – This tax applies only to employers with annual payrolls of more than $200,000. It’s a 0.9% tax on the first $200,000 of the employer’s annual payroll, plus an additional 0.9% on the excess amount. – Social Security tax – This tax applies to both employers and employees. Employers pay 6.2% on the first $127,200 of wages, and employees pay the full 12.4% on the first $127,200 of wages, plus an additional 2% on the excess amount of $33,400. – Federal income tax – Employers are required to withhold another 10% of wages paid to employees as federal income tax. 

How Are California Payroll Taxes Calculated? 

The amount of California payroll taxes you’ll have to pay depends on a number of factors. In general, the amount of taxes you have to pay will depend on the amount of wages you pay to each employee. The formula used to calculate California payroll taxes is:

  • Wages paid to employees – The total amount paid in wages for each pay period. California tax laws require that you withhold income tax from this amount.  
  • California income tax withheld – The amount of income tax withheld from each employee’s wages.  
  • Federal tax withheld – The amount of federal payroll taxes withheld from each employee’s wages. 
Who pays California Payroll Taxes? 

Federal law requires that all employers in the U.S. withhold federal payroll taxes from employees’ paychecks. However, California law requires that you also withhold state income tax from your employees’ paychecks. This state income tax is collected by the state and deposited into an account held by the employees. If you’re an employer with employees working in California, you must withhold and pay both state and federal payroll taxes. This income tax is collected by the state and deposited into an account held by the employees. If you have employees working in California, but don’t have a business headquartered there, you don’t have to pay California payroll taxes. 

Which Calculation Is Used for Which Type of Payroll Tax? 

Federal payroll taxes are calculated using the same formula as California payroll taxes. However, the tax rates and brackets change slightly each year. This means that you need to make sure you’re paying the right amount of taxes. You should use a software program to help you track your payroll taxes. If your business has more than $500,000 in annual payroll, you should also consider hiring payroll taxes for your staff. 

Who pays Additional Payroll Tax in California? 

Every business in California is required to pay a gross receipts tax. This is paid on all business sales made in the state. Business owners in the state who have employees working in California who earn more than $400,000 annually may have to pay a gross receipts tax on top of the state’s regular payroll tax. This is an additional tax, called an excise tax, levied by the state. 

Conclusion 

California has a complex set of payroll tax laws, which can make it difficult for employers to stay on top of their tax obligations. However, these laws do impact your bottom line, so it’s important to stay abreast of the latest taxes and payroll tax rules. To stay compliant, you’ll need to track your employees’ earnings and withhold the appropriate amount of taxes from their paychecks. The good news is that payroll taxes are a source of revenue for the government, so they’re worth the hassle. 

If you need help with your payroll taxes in California, Peak Reliance has the necessary experience in organizing the finances. We have experienced and qualified tax experts to assist you. Check out our pricing plans or call us at +1 (718) 218-5558 for more information. 

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California Payroll Taxes, Payroll Taxes, Tax filing, Tax Season

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The Self Employment Tax in California in 2022: All You Need to Know

The Self Employment Tax in California in 2022_ All You Need to Know

The Self Employment Tax in California in 2022: All You Need to Know

October 13, 2022

The Self Employment Tax in California in 2022_ All You Need to Know

peakreliance

Accounting, California, CPA, Taxes

You may love working for yourself, but it comes with its fair share of challenges. Self-employment taxes are just one of those challenges, but they’re not as scary as they sound. Self-employment tax is an optional tax that all self-employed workers in the U.S. must pay on their taxable income from self-employment activities. Self-employment tax is basically a combination of two different taxes: social security and Medicare taxes. Both these taxes are commonly referred to as “self- employment” or “SE” taxes. In addition to discussing the self-employment tax in California in the following article, we have also included information about the pros and cons of being self-employed so that you can make an informed decision before taking this career path. 

What Is the Self-Employment Tax? 

Self-employment tax is an optional tax on the income you earn from self-employment activities. Self-employment tax is basically a combination of two different taxes: social security and Medicare taxes. The social security tax rate is 12.4% (9.1% for employer and 3.3% for employee), and the Medicare tax is 2.9%. Just like wages earned from working for an employer, self-employed workers are required to pay the employee portion of these taxes out of their own pockets. Self-employed workers must pay the employer portion of these taxes as well. Self-employed workers are responsible for paying the entire self-employment tax themselves. An employer does not step in to pay the employer portion of these taxes as they do when you are an employee. 

How to Calculate Self-Employment Tax 

Calculating self-employment tax is relatively simple. To calculate the tax, multiply your self-employed net earnings by the following rates: 12.4% for social security and 2.9% for Medicare. Since you are both the employer and the employee, you will be responsible for paying the employer portion of the taxes, which is 12.4%. So you will multiply your self-employed net earnings by 12.4% and then subtract the result from the amount you actually earn from self-employment activities. Let’s look at an example to make sure you have a good grasp of the whole process. Say you earn $35,000 from self-employment activities. You will multiply the $35,000 by 12.4% and come up with a result of $4,700. Next, you will subtract the $4,700 from the total amount you earned from self-employment activities ($35,000), and you will have your taxable self-employed net earnings. 

When Are Self-Employment Taxes Due? 

You have to pay self-employment taxes when you file your annual return for self-employment activities on the 1040-SE form. The deadline to file this return is usually the same as the deadline for filing your 1040: April 15th. Keep in mind, however, that you can apply to have the deadline extended to June 15th if you aren’t able to file your 1040-SE by the due date, but you will have to pay a $100 late fee. 

How Much is the Self-Employment Tax? 

The amount of self-employment tax you will pay will depend on your net earnings from self-employment. As we’ve already discussed, the self-employment tax is calculated by multiplying your net earnings from self-employment by 12.4% for social security and 2.9% for Medicare. If your net earnings from self-employment are $37,000, for example, your self-employment tax will be $5,309 – $4,489 for social security and $820 for Medicare. Self-employed workers are allowed to deduct the employer portion of their self-employment tax when calculating their total income tax. For example, if you earn $37,000 on which you owe $5,309 in self- employment tax, the $5,309 will be subtracted from your taxable income, and you will only have to pay taxes on the remaining amount.

Pros of Being Self-Employed 

More Freedom: When you’re self-employed, you have the freedom to set your own hours, choose your own projects, and work from home. This flexibility allows you to have a more balanced life and spend more time with your loved ones. More Control: When you are self-employed, you have control over the projects you take on and the clients you choose to work with. You are also able to set your own rates, which means you can charge what you’re worth. More Money: Since you may be able to charge more as a self-employed worker than you would if you were an employee, you may be able to earn more as a self-employed worker. 

Cons of Being Self-Employed 

Higher Taxes: Since you have to pay the full amount of self-employment taxes yourself, you will end up paying more in taxes as a self-employed worker than you would as an employee. No Health Insurance: You will not be eligible to receive health insurance from an employer if you decide to go out on your own. And you will have to pay for your health insurance out of your own pocket. No Retirement Plan: Employees are offered retirement plans from their employers, but since you are self-employed, you won’t have this option. As a self-employed worker, you will have to save for retirement on your own. No Paid Vacation: When you are employed by an employer, you are entitled to paid vacation days. But as a self-employed worker, you will have to save money for vacation days. 

Final Words: Is Being Self-Employed Worth It? 

Being self-employed comes with its fair share of challenges, but it can also be extremely rewarding. In addition to being able to set your own hours, control your own projects, and charge what you’re worth, you will also have to pay higher taxes and take care of your own retirement savings. Being self-employed can be worth it if you are prepared for the extra challenges and sacrifices that come with this career path. 

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Accounting, cpa, Online CPA, Self Employment Tax, Self Employment Tax in California, tax

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What You Need to Know About California’s Corporate Income Tax in 2022 

California Corporate Income Tax 2022
California's Corporate Income Tax in 2022

What You Need to Know About California’s Corporate Income Tax in 2022 

October 1, 2022

California Corporate Income Tax 2022

peakreliance

Accounting, California, CPA, Taxes

As a business owner in California, it’s important to stay up-to-date on the latest corporate income tax rates and requirements. In 2022, the corporate income tax rate in California will be 8.84%. This is the rate you’ll be charged on your taxable income, which is calculated after subtracting any deductions or exemptions you may qualify for. 

There are also a number of tax credits and incentives available to California businesses. To learn more about these, and to find out if you qualify, visit the website of the California Franchise Tax Board. 

In this article, we’ll provide a brief overview of corporate income tax in California for businesses in 2022. We’ll also list some of the most important things you need to know, including the tax rate and exemptions. 

Corporate Income Tax Rates 

Here’s what you need to know about California’s Corporate Income Tax rates in 2022. The tax is levied on the taxable income of corporations, and there are three rates: 8.84 percent, 10.84 percent, and 12.84 percent. 

There are also a number of deductions and credits that can be taken into account when calculating your corporate income tax, so it’s important to consult with a tax professional to make sure you’re taking advantage of everything you’re entitled to. 

Filing Requirements 

So you’re a business owner in California? Here’s what you need to know about the state’s corporate income tax. 

Taxable income is calculated by subtracting deductible expenses from gross income. And there are a few different ways to file: you can file using the calendar year, the fiscal year, or the weighted average basis. 

You’ll also need to decide whether to file your return electronically or through the mail. If you choose to file electronically, you’ll need to use certified software that’s been approved by the California Franchise Tax Board. 

And don’t forget—the deadline for filing is April 15! 

Payment Options 

When it comes to paying your corporate income tax, you have a few different payment options. You can pay online, by phone, or by mail. But whatever you do, make sure you submit your payment on time! 

If you’re paying online, you can use the California Franchise Tax Board’s (FTB) My FTB portal. Just make sure you have your account information ready. You can also pay by phone by dialing 800-852-5711. 

And if you’re mailing in your payment, just make sure you send it to the right address. Here it is: 

California Franchise Tax Board 

PO Box 942867 

Sacramento, CA 94267-0001 

Other Considerations 

There are a few other things you’ll need to consider when it comes to California’s corporate income tax in 2022. For starters, the tax is based on a percentage of your taxable income. That means you’ll need to keep track of all your business expenses so that you can accurately calculate your taxable income. 

Another thing to keep in mind is that the tax applies to both resident and nonresident corporations. So, if you’re a business owner who operates in California but is based in another state, you’ll need to pay the corporate income tax. 

The good news is that there are a number of deductions and exemptions that you can claim to reduce your taxable income. Make sure to speak with an accountant or tax specialist to learn more about what these are and how they might apply to your business. 

Conclusion 

As of right now, California’s corporate income tax rate is 8.84%. This is the rate that all corporations within the state must pay on their taxable income. The deadline for filing your corporate income tax return is the same as your personal income tax return – April 15. 

Make sure you are aware of these rates and deadlines so that you can file your taxes correctly and on time. 

 

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Accounting, California taxes, cpa, Online CPA, tax, Taxes in California 2022

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