US Tax & Accounting Framework
The United States tax system is one of the most complex in the world, with federal, state, and local tax obligations that vary significantly by jurisdiction. The Internal Revenue Service (IRS) administers federal tax law, while each of the 50 states maintains its own Department of Revenue with distinct filing requirements, rates, and deadlines. Businesses must navigate corporate income tax (21% federal rate), individual income tax (progressive brackets up to 37%), employment taxes (FICA — Social Security 6.2% + Medicare 1.45%), and excise taxes.
For business owners, entity selection is critical — choosing between sole proprietorship, partnership (Form 1065), S-Corporation (Form 1120-S), C-Corporation (Form 1120), and LLC structures directly impacts tax liability, self-employment tax exposure, and liability protection. PakalaTax guides clients through entity structuring, ensuring optimal pass-through deductions under Section 199A (qualified business income deduction of up to 20%).
Multi-state operations create nexus — the obligation to file and pay taxes in each state where a business has sufficient connection. Since the 2018 South Dakota v. Wayfair decision, economic nexus thresholds (typically $100,000 in sales or 200 transactions) trigger sales tax collection obligations even without physical presence. Our team monitors nexus exposure across all 50 states and manages quarterly estimated tax payments, apportionment schedules, and composite return filings.
Payroll compliance requires timely W-2 and 1099 issuance, quarterly Form 941 filings, FUTA (Form 940), state unemployment insurance, and adherence to the Fair Labor Standards Act. Year-end ACA reporting (Forms 1095-B/C) and state-specific paid leave programs add further complexity. PakalaTax handles end-to-end payroll processing with direct deposit, garnishment management, and certified payroll for government contractors.