5 Types of Business Tax Liabilities and How doola Minimizes Them

I always look forward to filing my taxes!

Ever heard an entrepreneur saying that? Definitely, not in the real world!

You won’t even recall a movie character who loves tax time! It is that unrealistic. Even in an ideal world.

Want to know what else entrepreneurs don’t like? Business tax liabilities.

If you’re a business owner reading this, your mind just flashed to confusing forms and looming deadlines.

And we get it.

Staying on top of business tax liabilities is not just about compliance; it’s about avoiding costly penalties that could hurt your bottom line.

From income tax to employment tax, the sheer volume of responsibilities can feel overwhelming.

But you are not alone, and you don’t have to go through it alone.

There’s a smarter way to manage tax liabilities—the doola way.

We help you tackle taxes head-on, simplifying the process and minimizing your liabilities so you can spend more time focusing on what truly matters—growing your business.

In this blog, we’re breaking down the five most common business tax liabilities and showing you exactly how doola can help you lower that tax weight.

And if you need help lowering your tax burden, book a consultation with us.

✅ 1. Income Tax Liability

Every business is required to pay income tax on its profits, and for small business owners, this can be a substantial financial burden.

Whether you run an LLC, S Corporation, or partnership, your business’s income will be taxed at various levels.

And navigating the maze of tax rules can be confusing and frustrating, especially when the stakes are high.

But before we tell you how doola can lower income tax liabilities, here’s some quick trivia to indulge in.

Fun Fact: Income Tax Trivia

Did you know in the early 20th century, the US income tax rate was only 1%?

Fast forward to today, and depending on your business structure and state, tax rates can easily climb into double digits!

A significant change, right?

Let’s now discuss how doola can help you navigate this change.

🚀 How doola Helps

doola’s personalized tax advisory services are designed to help small business owners manage their income tax liabilities.

Whether you’re looking to maximize deductions, optimize your tax structure, or unlock valuable credits, we’ve got the expertise to make it happen.

Additionally, our comprehensive bookkeeping services keep your financials organized and ready for tax season, ensuring you file accurately and on time.

Book a demo to get started.

Our Customer Story

We’d like you to meet Alex.

The proud owner of a successful digital marketing agency. And a doola customer.

Alex began with DIY bookkeeping, but as his business grew and taxes soared, he realized it was time to rope in the experts.

A year and a half later, when he faced a surge in profits, Alex’s income tax bill also started growing, and he was unsure how to navigate deductions and credits.

That’s when he turned to doola for help.

Through our tax advisory services, he learned how to deduct expenses like office equipment, travel costs, and software subscriptions.

This drastically reduced his income tax liability, saving him a substantial amount.

With doola handling the complexities, Alex was able to focus on expanding his agency, free from tax stress.

✅ 2. Self-Employment Tax Liability

If you’re a freelancer or the owner of a sole proprietorship, brace yourself for self-employment tax, which covers both Social Security and Medicare contributions.

While W-2 employees split this burden with their employers, self-employed individuals are responsible for the full amount—currently around 15.3% of your net earnings.

That adds up quickly!

🚀 How doola Helps

doola simplifies self-employment tax by offering a compliance dashboard that helps you track:

• What you owe

• When you owe it

Additionally, our bookkeeping services make sure your records are updated throughout the year, so you’re not scrambling for receipts and invoices when tax season rolls around.

doola’s financial experts can also help you determine if it’s time to incorporate your business into an LLC or S Corporation to minimize the sting of self-employment tax.

Note: S Corporations can help save on these taxes by allowing you to pay yourself a salary and distribute remaining profits.

Our Customer Story

About time we introduce you to Jane, a freelance graphic designer. And yet another doola customer.

Jane’s side hustle had turned into a successful business that took off in no time.

But with all that success came an unexpected downside—her self-employment tax bill was through the roof!

That’s when she reached out to doola.

After a consultation with our financial experts, Jane followed their advice and restructured her business into an S Corporation.

With doola’s guidance, she began paying herself a reasonable salary and distributed the remaining profits as dividends.

The result?

Jane’s self-employment tax bill was slashed dramatically.

With her tax worries behind her, she refocused on what she does best—growing her business and creating stunning designs.

Oh, and you definitely don’t want to miss Jane’s tax-saving hacks—thanks to doola’s strategic guidance, they flipped the script on her business!

✅ 3. Employment Tax Liability

If you’ve already hired employees, first off, kudos on hitting this major business milestone—it’s no small feat!

But now you’ve got payroll taxes on your plate too.

Your employment taxes will include:

• Social Security

• Medicare

• Federal Unemployment (FUTA) taxes

You’ll also need to withhold federal income taxes from your employees’ wages.

As the industry wise owls are rightly say:

Managing payroll taxes can become a full-time job on its own, especially as your team grows.

But definitely not on doola’s watch.

Keep reading to learn how.

🚀 How doola Helps

doola takes the complexity out of payroll taxes by offering solutions that ensure timely and accurate tax withholding.

Our platform keeps track of all employee-related taxes, ensuring payments are made on time and compliance is met—all without you having to lift a finger.

And if you ever need clarity on employer tax credits (like the Employee Retention Credit), doola’s tax experts are just a click away.

Speak to a tax expert today.

Our Customer Story

Meet Sophie.

The proud owner of a bustling boutique bakery. And one of our happy customers!

She recently hired two employees to help with the growing demand, but between frosting cakes and ringing up customers, payroll taxes were a whole other challenge she didn’t anticipate.

The thought of handling Social Security, Medicare, and federal tax withholdings left her feeling overwhelmed—until she discovered doola.

With doola’s payroll services, Sophie didn’t have to worry about a single tax-related detail.

Everything—from payroll deductions to timely tax filings—was managed seamlessly by the platform.

Taxes that once seemed like an impossible task were now handled behind the scenes, giving Sophie the freedom to focus on what she loved most: growing her bakery and perfecting her recipes.

Thanks to doola, Sophie no longer stressed about payroll or tax deadlines.

Instead, she could pour her energy into expanding her business, confident that her tax liabilities were taken care of.

✅ 4. Sales Tax Liability

If your business sells taxable goods or services, you’re responsible for collecting and remitting sales tax.

The challenge?

Sales tax laws vary from state to state, and if you’re an e-commerce business selling across state lines, the complexity levels up fast.

But so does our strategy!

And before getting into more strategies to hit those tax-saving targets, how about we take a little “fun fact” detour?

You made it this far in your entrepreneurial journey (and in today’s blog!)—you’ve earned a tax trivia moment!

Let’s see if it blows your mind!

Fun Fact: Sales Tax Trivia

Did you know Delaware, Montana, Oregon, New Hampshire, and Alaska are the “nomad” states for sales tax?

They don’t impose a state sales tax at all.

You read that right—zero. Nada.

Wondering which of these states would be best for saving up on sales tax?

We are happy to help you select the best state for forming your LLC and minimizing tax liabilities.

🚀 How doola Helps

doola provides real-time insights into sales tax collection through our compliance dashboard, ensuring you know exactly how much to collect and remit in each jurisdiction.

We also offer automatic sales tax reporting so that you’re always on top of what you owe, reducing the risk of costly penalties.

Our Customer Story

If you’re enjoying our customer stories, Brian’s journey would strike a chord.

Especially if you are also into the retail space like him.

One of the most savvy founders we’ve guided so far, Brian runs a successful online apparel store that ships nationwide.

He was living the dream, shipping his stylish creations across the country.

But managing sales tax for different states? That quickly turned into a logistical headache.

In came doola, ready to turn the tide.

After Brian integrated doola’s sales tax tracking feature, everything changed. He finally had a clear map of how much tax to collect in each state—no more guesswork!

The automated reporting took the weight off his shoulders, ensuring he was never late with a payment again.

✅ 5. Franchise Tax Liability

Depending on the state where your business hangs its hat, you may need to pay franchise taxes.

This is essentially a fee for the privilege of doing business in that state and is typically calculated based on your business’s net worth or income.

While not every state charges a franchise tax, those that do can impose hefty fees that can catch business owners off guard.

🚀 How doola Helps

doola’s expert tax team ensures that you understand your franchise tax obligations based on where your business operates.

We provide guidance on minimizing these taxes through deductions and credits, helping you avoid surprises during tax season.

Our Customer Story

Story time again—this time with Emily, a doola customer since the last three years!

Emily had recently formed her startup in Delaware, buzzing with excitement about her new venture.

However, she soon discovered an unwelcome surprise lurking in the shadows: the annual franchise tax she owed.

Feeling a bit overwhelmed and unsure of how to tackle this unexpected expense, she turned to doola for guidance.

With the help of doola’s seasoned professionals, Emily received timely reminders about her tax obligations, along with invaluable tips on how to reduce her franchise tax burden.

Thanks to their expertise, she navigated the complexities of compliance with ease and managed to save money in the process.

With the weight of tax worries lifted off her shoulders, Emily could finally focus on what she loved most—growing her startup and turning her American dream into reality!

How to Minimize Tax Liabilities with doola

Now that you’ve seen how savvy entrepreneurs slashed their tax bills with doola, it’s time for you to join the ranks and trim yours.

Having said that:

Minimizing tax liabilities isn’t just about paying less.

It’s about paying smart.

doola offers a holistic approach to tax liability management for small businesses by providing the following services:

🎯 doola Bookkeeping

Our automated bookkeeping tools keep your financial records clean and accurate, ensuring you never miss out on deductible expenses that could lower your tax bill.

Check out all our services and pricing.

🎯 Expert Tax Consultation

Our team of seasoned tax consultants offers personalized, in-depth tax consultations to address your business’s specific needs.

Whether you’re aiming to maximize deductions, optimize your tax strategy, or decipher the complexities of pass-through taxation, we provide the guidance you need.

From assessing your current tax structure to identifying opportunities for savings, our dedicated team of Certified Public Accountants (CPAs) ensure you stay compliant while reducing your overall tax liability.

Book a CPA consultation today.

🎯 Compliance Dashboard

Stay fully compliant with our intuitive compliance dashboard.

Monitor your tax deadlines, filings, and regulatory obligations in real-time, ensuring all tax submissions are accurate and timely.

With doola, you’ll never miss a critical due date or face unnecessary penalties again.

🎯 Payroll Management

doola simplifies payroll operations for small businesses, ensuring accurate employee payments and proper tax withholdings.

Our tailored solutions help you navigate payroll tax regulations seamlessly, reducing the burden of managing tax liabilities for small businesses.

🎯 Sales Tax Reporting

doola’s automated reporting tools let you easily track, collect, and remit sales taxes, ensuring you stay fully compliant with state tax regulations while freeing up valuable time to grow your company.

Every business owner we’ve helped over the years are confident about one thing:

With doola, you won’t just minimize your tax liabilities; you’ll optimize your business for success.

Smash Your Tax Goals with doola

Your business deserves a light tax weight.

Not a heavy load that drags you down!

That said, tax liabilities can often feel like a massive burden that small business owners find difficult to manage.

But doola is here to do the heavy lifting!

All while helping you stay compliant and keeping your tax obligations in check.

Are you ready to take control of your tax liabilities and streamline your business’s financial health?

Schedule a free consultation today and let’s grow your empire together.