The USA has a multilayered taxation system. Taxes are imposed by the state, the federal government, and even the local government. As a business owner, it is your responsibility to be familiar with and pay your state, local, or federal taxes if you’re transacting in the USA.
In this Guide, we discuss the basic information you need to know about taxes in the USA that are relevant when you are starting a business – federal, state, municipal, and local. These include personal income taxes, major tax laws, filing tax returns, annual reports, tax incentives for businesses, tax rates, and tax structures for different legal entities.
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Federal taxes in the USA: Brief intro
Your business structure determines how you will pay and how much taxes you will pay to the government – and whether these taxes will be paid to the local, state, or federal government of the USA. That is why it is crucial, when choosing the ideal legal entity for your business, that you consider tax structure and familiarize yourself with federal taxes in the USA.
[...] Continue readingWhat you need to know about Delaware tax policies
What you need to know about Delaware tax policies
The First State, Delaware, is one of the most tax-friendly states in the US, not only for individuals but for investors as well. The state is considered a tax shelter in the US, making it a very attractive state for companies to incorporate. In this article, we go over the key tax policies in Delaware and why these can benefit entrepreneurs looking to incorporate in the state.
No sales tax in Delaware
Delaware does not impose sales or state taxes. However, the state does levy gross receipt tax. It offsets the absence of sales tax with moderate income taxes for individuals, as well as excise taxes. The state imposes a flat rate of excise tax on motor fuel and alcohol (per gallon) and $2.10 per pack of cigarettes.
In addition, Delaware’s property tax is only 0.56%, which is among the lowest in the country.
[...] Continue readingThe key tax policies in Florida you need to know
The Sunshine State of Florida does not only offer scenic places, attractive beaches, and pleasant weather. Beyond that, Florida is also an ideal investment destination. One of the major drivers of vibrant economic activities in the state is its friendly tax structure. In fact, according to the Tax Foundation’s 2022 State Business Tax Climate Index, Florida offers the fourth-best tax structure in the U.S. Are you interested in starting a business in the Sunshine State? Here are the key tax policies in Florida you need to know.
At a glance
| Tax type | Tax rate |
|---|---|
| Individual income tax | None |
| Corporate income tax | 5.5% |
| State sales tax | 6% |
| Local sales tax | 2% max |
| Average combined of state and local sales tax | 7.01% |
| Average property tax | 0.98% |
| Excise tax | 6% |
Corporate Income and Privilege Tax Registration
Applying for state tax IDs & tax exemption certificates
Registering for corporate income and privilege tax accounts is a requirement for many businesses. Nonprofits that are tax-exempt on the federal level are often eligible to apply for exemption from these taxes. State tax authorities penalize companies that do not comply with the laws to register for and pay corporate income tax. This guide summarizes the key concepts involved in obtaining tax identification (ID) numbers, applying for exemption certificates, and maintaining corporate income tax compliance.
Introduction to Corporate Income & Privilege Tax
Corporate income tax is a tax on the net income of corporations. In most cases, only corporations are subject to this tax.
Privilege taxes are imposed on businesses for the right to conduct business in each state. Privilege taxes are usually based on the gross receipts or net worth of a business, but some are levied as a flat fee. States often use terms like franchise tax, business entity tax, or business and occupation tax to refer to their local privilege tax. Some states have privilege taxes that apply to very specific groups of businesses, such as banks or other financial institutions, but this guide does not cover those taxes.
[...] Continue readingAnnual Report Filing in Delaware
Annual reports are updates to entity information that are due to the secretary of state every year. To remain in good standing, LLCs, corporations, and nonprofits must file annual reports.
Due dates, filing fees, and forms differ significantly depending on the entity type and whether the entity is domestic or foreign to the state. Some states require biennial reports (due every two years) and even decennial filings, as Pennsylvania does.
In addition to ongoing annual reports, some states require an initial report, which is usually due shortly after filing formation or qualification documents.
On this page, you can quickly navigate to the specific annual report requirements for your corporation, LLC, or nonprofit. The annual report due dates and filing fees for each entity type in each state are listed in our handy reference table.
With little consistency across jurisdictions, organizations of all sizes face difficulties in tracking deadlines and filing on time.
[...] Continue reading