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Whatever state you operate your business in, there will be a state tax of some sort. In general, state business taxes provide a business with tax relief due their deductibility. Business taxes vary according to individual states. Wherever the principal place of your business operations is located that will be the state tax laws that you will need to follow. For instance, your business is located and operates in Florida. You need to know and follow Florida's state tax laws.
The most state revenue is generated from income taxes. Only seven states in the United States do not impose a state income tax.
In addition to paying income taxes, businesses pay a number of other taxes to their state's taxing authority. Be certain you are familiar with your individual state's tax laws and regulations. You can only benefit by this. Here are some other taxes at the state level that your business may be responsible for:
Business and Occupational tax. This tax is based on the gross income of a business entity. Rates vary according to the business activity code.
Sales and use tax. Just about every state imposes a sales tax on items a business sells. Each state has different sales tax rules and regulations to follow regarding the collection and exemptions involved. Usually the seller is responsible for collecting and paying state sales tax whether it has been collected from the buyer or not.
The use portion of the tax involves out-of-state purchases of goods where no sales tax has been paid yet.
Business transfer taxes. Be prepared to pay a business transfer tax if your business changes ownership. Your state may impose this tax on either the seller, buyer, or both parties.
Real estate taxes. Be prepared to pay your state an annual tax on any real estate your business owns.
Personal property taxes. Some states impose an annual tax on the value any equipment and vehicles your business owns and uses in its operations.
(These two combined business taxes are known as real and personal property taxes.)
Payroll taxes. All states with income taxes have a payroll taxes, deduction and collection system similar to the federal system.
Excise taxes. Another source of business tax revenue states receive is from imposing an excise tax on items such as alcohol, cigarettes and other tobacco items, motor fuel, and alcohol (wine, beer, distilled spirits). If your business is involved in buying or selling any of these items, you will be responsible for the corresponding taxes to the state. Check with your state to be certain.
Out-of-state taxes. If you employ anyone not living in your state, you can be responsible for withholding taxes from your nonresidents' paycheck, then paying state income taxes to their home state.
State and local agencies. To find out more information about what your individual state needs for proper business tax reporting, you can do two things. One, you can visit the IRS website to find links to various state taxing authorities. Second, you can visit a websites such as statelocalgov.net and taxadmin.org. Or, look in your phone directory under State Government.
|Jennifer Mathes, Ph.D.|