Music Trade Review

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PROBLEMS
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PIANO
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FEDERAL TAXES—Income Taxes
Federal income taxes apply to all
business owners as individuals and to
those business enterprises that have
been incorporated.
Individuals receiving over $600 in in-
come per year must make a report to
the Collector of Internal Revenue in the
district in which they live. In addition,
a yearly declaration of Estimated Tax
must be filed by March 15 if you are
on a calendar year basis, with payment
in full or on a quarterly basis. The
declaration must be filed by every citi-
zen or resident of this country who ex-
pects to be required to file a return and
who expects to receive wages (subject
to withholding) in excess of $4,500.
plus $600 for each exemption claimed,
or who expects to receive income from
all other sources in excess of $100.
Corporations, unless expressly ex-
empt under the Internal Revenue Code,
must report yearly to the Collector, re-
gardless of whether or not they have
income to report. No advance estimate
of tax is required from corporations.
Tax Withholding
If your business has employees, you
will be required to withhold from their
salaries the estimated amount of their
Federal income taxes and pay it to the
Collector of Internal Revenue. A com-
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VNE of the few pianos now on
the market that is made, owned
and operated by the same family
that created it.
1 OUR generations of the Kra-
kauer family have produced the
Krakauer piano—over 75 years
in the same family.
•
Established 1869
1 HE Krakauer is the best piano
for "Tone," "Responsiveness" and
"Case Design."
KRAKAU ER
BROS.
Retail Warerooms:
25 WEST 57th STREET
Factory:
401 WEST 124th STREET
NEW YORK
26
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tax obligation may be greater but the
corporation may be the most suitable
form of organization, when all consid-
erations are taken into account.
"IT'ACH business enterprise, no matter
*"-^ how small, must comply with tax
laws and pay taxes in a number of ways.
This summary is designed to tell briefly
about the principal types of taxes which
one must consider in planning and op-
erating a business. It is only an intro-
duction to business taxes. For more de-
tailed information, one should contact
the appropriate taxing agencies.
Form of Business Organization
Most taxes are determined by the
kind of business, and the amount of
business done, rather than by the form
of organization. One will find that the
majority of taxes will be the same
whether one operates the store as an in-
dividual proprietorship, as a partner-
ship, or as a corporation. However, if
incorporated the business, will be liable
to the Federal corporate income tax, a
state corporate income tax—if you do
business in any of 33 states or the Dis-
trict of Columbia—and certain special
taxes and fees. If not incorporated one
will avoid the necessity of paving these
taxes. This does not mean that in every
instance you will pay less in taxes by
operating as a proprietorship or part-
nership. Under certain circumstances
the total tax outlay of the owners of a
corporation and the corporation itself
may be less than that of the proprietor
or partners in an unincorporated busi-
ness. Under other circumstances, the
klllkll us
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bined return (Form 941) is used to re-
port both withheld income and social
security taxes.
Be sure to write to the Collector for
your district for complete information
concerning the Federal taxes applying
to your business. He can supply you
with tax withholding tables showing the
deductions to be made from wages for
all types of payrolls. In connection
with the Federal individual income tax,
you will find helpful a pamphlet en-
titled "Your Federal Income Tax,"
which is published by the Bureau of In-
ternal Revenue and revised annually to
reflect changes in income tax laws. It
may be purchased for 25 cents from the
Government Printing Office, Washing-
ton 25, D. C, or from the field offices
of the Department of Commerce.
Excess Profits Tax
To help defray rearmament expenses,
an excess profits tax law similar in
many respects to the excess profits tax
law in force during World War II was
enacted in 1950 and extended in 1951.
This tax applies to corporations only.
However, corporations having profits of
$25,000 or less during a taxable year
generally are not subject to the tax. but
only to the corporate income tax. A
test to determine possible liability for
the excess profits tax has been provid-
ed by the Bureau of Internal Revenue
as Schedule N of Form 1120 (corpor-
ate income tax return).
Federal Social Security Taxes
Important changes in the Social Se-
curity Act went into effect during 1951.
A brief outline of the revised provisions
is given here. A more detailed discus-
sion of social security provisions can
be found in the publications mentioned
at the end of this section. It would be
well to read the publication which is
best suited to your needs, and to seek
advice on any doubtful points from
your local Social Security Administra-
tion office or from the Collector of In-
ternal Revenue for your district.
There are two Federal social security
taxes—the old age and survivors tax,
which must be paid by all businesses
employing one or more persons, and the
unemployment compensation tax, which
THE MUSIC TRADE REVIEW, FEBRUARY, 1952