Local and State Taxes – When it comes to federal taxes, independent contractors are also required to pay local and state taxes – payroll, self-employment, property tax, sales, and income. These taxes can vary from one state to another and are based on your business structure. Please keep in mind that if your company has employees, you as a business owner will be also responsible for paying unemployment taxes. Inform yourself about these state tax obligations.
4. Business Licenses and Permits – Just like any type of business, all independent contractors must have proper licenses and permits. Depending on your business niche, your industry, and where your business is located, you may need to be licensed on both state level and federal level. The federal licenses are required for businesses included in any sort of activity that is regulated and supervised by federal agencies. State permits and licensing will vary depending on your location.