Which of the following is listed as a common type of small business tax?

• A. Self-employment tax
• B. Corporate tax
• C. Value-added tax
• D. Capital gains tax

Answer: (A)

Self-employment tax is the tax most small business owners who work for themselves owe to fund Social Security and Medicare. In the U.S., sole proprietors, partners, and LLC members treated as self-employed calculate this tax on their net earnings and report it with their personal return, typically via Schedule SE. It’s especially common because many small businesses are structured as pass-through entities rather than corporations, so the tax is assessed at the individual level rather than the entity level. You can deduct half of the self-employment tax when figuring ordinary income tax, which lowers the overall burden. By contrast, corporate tax applies to C corporations, which many small businesses avoid by operating as pass-throughs; value-added tax is common in many countries outside the U.S., not a standard small-business tax here; and capital gains tax comes into play only when selling assets, not for routine business operations.