Small Business Taxes in New Hampshire | Our Essential Guide


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New Hampshire Small Business Taxes

Owning and operating a small business in New Hampshire is exciting and fulfilling. However, it also comes with responsibilities, including staying informed about New Hampshire tax laws and ensuring that your New Hampshire business complies with all applicable regulations. If you will start a Limited Liability Company in New Hampshire, this one’s for you! 

This comprehensive guide will walk you through the critical aspects of Small Business Taxes in New Hampshire. Understanding different taxes allows you to make informed decisions that will benefit your business and help you stay on the right side of the law.

Webinarcare Editorial Team will help you easily understand small business taxes in New Hampshire. You must be guided by all the factors gathered in this article.

Small Business Tax Law in New Hampshire

New Hampshire’s small business tax law defines and outlines the tax obligations and exemptions for various businesses, including Limited Liability Companies (LLCs). These laws comprise various taxes that small businesses must comply with for income, sales, payroll, property, and other industry-specific taxes. Each type of tax presents unique implications for small businesses, and navigating through this maze can be quite challenging. Therefore, understanding these taxes in detail is crucial for LLCs as it aids in effective tax planning and helps avoid non-compliance penalties.

LLCs in New Hampshire enjoy certain benefits under the small business tax law. Generally, an LLC is considered a pass-through entity, and its profits are passed directly to its owners, who then report this income on their personal tax returns. This differs from starting a corporation in New Hampshire that faces double taxation on corporate profits and dividends. However, it’s noteworthy that the taxable profit of an LLC is not just the cash the owners take out – it includes the company’s overall profits.

So, appropriate measures must be taken to ensure accurate reporting and minimize tax liabilities as much as possible. Tax laws concerning LLCs often change, and keeping abreast of these updates plays a pivotal role in the successful running of the business. If you are still looking for an LLC service to help you with your taxes, we reviewed these services, including the top features and affordable prices.

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Type of Taxes For Small Businesses in New Hampshire

Starting a business in New Hampshire significantly contributes to the local economy. However, operating such businesses here requires an in-depth understanding of the types of small business taxes. Small businesses must adhere to these taxes’ specific regulations, rates, and filing deadlines to avoid penalties and operational interruptions. These taxes include but are not limited to:

  • Income Tax: Typically, all businesses in New Hampshire must file an income tax return and may need to pay capital gains tax on any profits. There is no income tax rate in New Hampshire.
  • Sales Tax: Businesses in New Hampshire that sell physical products might be required to collect sales tax on transactions and forward it to the New Hampshire government. The sales tax rate in New Hampshire is 0%; New Hampshire has no sales tax.
  • Payroll Tax: If a business in New Hampshire has employees, it is responsible for withholding payroll taxes from the employee’s wages and transferring them to the relevant tax agency.
  • Property Tax: Businesses that own property in New Hampshire may be subject to a property tax varying from county to county. The property tax rate in New Hampshire is 2.20%.
  • Franchise Tax: Some states, including New Hampshire, may have a franchise tax, which applies to businesses simply for the privilege of operating in that state. New Hampshire does not have a franchise tax for LLCs.
  • Self-Employment Tax: Sole proprietors and freelancers in New Hampshire may be required to pay self-employment taxes, covering social security and Medicare costs.
  • Excise Tax: Some businesses may be liable to pay excise taxes, typically applied to certain goods and services such as alcohol, tobacco, and gasoline.
  • Unemployment Insurance Tax: Employers in New Hampshire might be required to pay unemployment insurance taxes, which fund unemployment benefits for workers who lose their jobs.

Understanding the types of small business taxes in New Hampshire is the first step towards financial transparency. Remember, when you start an LLC, you’re not only launching a business, you’re also taking on a mantle of fiscal responsibility. Stay informed, stay compliant, and contribute to the growth of New Hampshire’s economy.

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Calculate Taxes in New Hampshire

Understanding how to calculate taxes for small businesses in New Hampshire. You will not just fathom the different taxes and how they work but also how you came up with them. Here is how you calculate taxes in New Hampshire.

  • Income Tax: Business income tax is calculated based on the profits reported on your income tax return. The amount of tax due will be based on the tax rate in your specific tax bracket.
  • Sales Tax: To calculate sales tax, multiply the total sales receipts by the sales tax rate in New Hampshire. The sales tax amount should be added to the customer’s price for goods or services.
  • Payroll Tax: Payroll taxes include federal income tax, Social Security, and Medicare taxes. You can use the tax tables or tax calculator provided by the IRS to calculate these taxes. In addition, employers are responsible for paying the Federal Unemployment Tax (FUTA).
  • Property Tax: Property taxes are calculated by multiplying the property’s assessed value by the local property tax rate.
  • Franchise Tax: Franchise tax calculation varies by state. It could be based on your net worth, income, or a flat fee. Consult the New Hampshire Department of Revenue Administration for details.
  • Self-Employment Tax: Self-employment tax consists of Social Security and Medicare taxes. To calculate it, multiply your net profit from self-employment by 15.3%.
  • Excise Tax: Excise taxes are usually included in the product’s price, like gasoline or alcohol, and are often levied per unit (like per gallon or bottle) rather than as a price percentage.
  • Unemployment Insurance Tax: These rates vary by state and by the individual employer’s experience rating. The employer’s experience rating is based on the benefits paid to former employees, so new businesses in New Hampshire usually have a relatively low rate.

It is recommended to consult a tax professional to ensure accuracy and compliance with all relevant tax laws.

File and Pay Business Taxes in New Hampshire

The process of filing and paying taxes in New Hampshire can be broken down into several steps. Here is a step-by-step guide on how to go about it:

  1. Gather all relevant documents: Collect all the necessary paperwork, including W-2 forms from your employer(s), 1099 forms for freelance or self-employment income, income statements from banks or financial institutions, and any other relevant receipts or records.
  2. Determine your filing status: Assess your marital status and household situation to determine the appropriate filing status, such as Single, Married Filing Jointly, Married Filing Separately, Head of Household, or Qualifying Widow(er) with Dependent Child.
  3. Choose a filing method: In New Hampshire, you can file taxes electronically using tax software or prepare a paper return. Electronic filing is generally faster, more convenient, and can minimize errors. You can file your taxes by mail and submit them to the New Hampshire Department of Revenue Administration.
  4. Calculate your taxable income: Calculate your total income by adding up all your earnings, including wages, tips, self-employment income, dividends, and interest. Deduct any eligible adjustments and deductions to arrive at your taxable income.
  5. Complete the tax return: Fill out the New Hampshire tax forms electronically or on paper based on your chosen filing method. Take your time to review and double-check the information provided to minimize errors.
  6. Submit your tax return: If filing electronically, follow the instructions provided by the tax software to submit your return electronically. If filing on paper, mail your completed tax return to the New Hampshire Department of Revenue Administration. Include any required forms, schedules, and copies of your W-2 or other income statements.
  7. Determine your payment method: Calculate the taxes owed or the refund due. If you owe taxes, there are several payment options available, such as electronically via direct debit or credit card, by mail with a check or money order, or through an electronic funds transfer. Choose the payment method that suits you best.
  8. Pay your taxes: Submit your tax payment by the New Hampshire deadline. Ensure the payment is postmarked by the due date to avoid penalties or interest charges.
  9. Keep copies for your records: Make copies of all documents associated with your tax return, including the completed forms, payment proof, and any supporting documentation. Store these records in a safe place for future reference.

Remember to consult New Hampshire’s official tax website or seek professional advice to ensure compliance with any specific tax regulations or updates in the state.

Small Business Tax Deductions

Tracking and claiming deductions for your New Hampshire small business can significantly reduce your tax burden. Some common deductions available to small businesses in New Hampshire include:

  • Business Expenses: Ordinary and necessary expenses, such as rent, utilities, and office supplies, can be deducted from your income.
  • Depreciation: The cost of business property, such as equipment, vehicles, and buildings, can be deducted over a specified period. Knowing it has tax deductions is better if you plan to create a rental property for your New Hampshire LLC
  • Employee Wages and Benefits: Employees’ salaries, wages, and benefits can be deducted as a business expense. 
  • Business-related Travel and Meals: Expenses incurred while traveling for business purposes or meals consumed during business meetings can be deducted, subject to certain limitations.
  • Home Office Deduction: If you use a portion of your home exclusively for business purposes, you may be able to deduct a portion of your home expenses, such as mortgage interest, property taxes, and utilities.
  • Retirement Plan Contributions: Contributions made to a qualified retirement plan for yourself and your employees can be deducted as a business expense.

Hire a Tax Professional in New Hampshire

Accurate tax filing requires a certain level of expertise. Recognizing this, seeking the services of a good tax professional in New Hampshire can be beneficial for your small business. Hiring a tax professional will safeguard you from possible mistakes and help you maximize your tax savings. Considering their value, selecting the right professional becomes crucial.

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Sanctions For Not Filing Small Business Taxes in New Hampshire

Sanctions and penalties exist for not paying taxes for a small business in New Hampshire. The specific sanctions and penalties can vary depending on the amount owed and the time the taxes remain unpaid. Some common sanctions and penalties for unpaid small business taxes in New Hampshire include:

  • Late payment fees
  • Interest charges on unpaid taxes
  • Revocation of business license
  • Seizure of business assets
  • Legal action, such as wage garnishment or liens on the property.

Paying small business taxes on time and in full is important to avoid these sanctions and penalties. Suppose you are unable to pay your small business taxes. In that case, it is recommended that you contact the New Hampshire Department of Revenue Administration or a tax professional to discuss payment options and avoid any penalties.

Where Do I File My Small Business Taxes in New Hampshire?

Small business taxes in New Hampshire can be filed with the New Hampshire Department of Revenue Administration or a state-approved online tax filing service. The specific process for filing small business taxes can vary depending on the business entity type and the revenue earned during the tax year. It is recommended that small business owners consult with a tax professional or visit the New Hampshire Department of Revenue Administration website for more information on how to file small business taxes in New Hampshire.

FAQs

What are the tax rates for small businesses in New Hampshire?
New Hampshire has no general sales tax, no income tax on salaries and wages, and no personal state capital gains taxes.
Are there any taxes that small business owners in New Hampshire need to be aware of?
There is a Business Enterprise Tax in New Hampshire for businesses that meet certain thresholds.
How is the Business Enterprise Tax calculated?
The tax is calculated based on the enterprise’s gross business receipts, enterprise value tax base or compensation tax base.
What is the minimum threshold for the Business Enterprise Tax?
$150,000 of taxable enterprise value.
Is the Business Enterprise Tax based on net income or gross receipts?
Gross receipts.
Can the Business Enterprise Tax and the Business Profits Tax be paid at the same time?
Yes, they can be paid through the Department of Revenue Administration or DRA.
Do businesses in New Hampshire have to file taxes with the state every year?
Yes, businesses are required to file their Business Enterprise Tax and Business Profits Tax returns with the DRA, depending on their gross receipts or profits.
When is the deadline for businesses to file their tax returns?
March 15th for businesses operating on a calendar year basis.
What happens if a business fails to file its tax return by the deadline?
If a business fails to file its tax return by the deadline, it may face penalties and interest on any unpaid taxes.
As a small business owner, how can I make sure that I am paying the right amount in taxes?
It’s recommended that you speak with a certified public accountant or tax attorney to make sure you are paying the right amount of taxes.
What is the Business Profits Tax in New Hampshire?
The Business Profits Tax is a tax on net income that is earned by a limited liability company (LLC), corporation, partnership, or sole proprietorship operating in New Hampshire.
How is Business Profits Tax rate determined?
The rate is determined based on a graduated scale that ranges from 7.9% to 8.2%.
Does New Hampshire offer any tax incentives for small businesses?
Yes, some businesses may qualify for tax incentives based on location or industry, such as the research and development tax credit.
What is the research and development tax credit in New Hampshire?
The research and development tax credit is available to businesses that invest in research and development activities in qualifying fields in the state of New Hampshire.
How can I apply for tax incentives in New Hampshire?
You should contact the New Hampshire Department of Revenue Administration or your tax professional to find out if you qualify for tax incentives and how to apply for them.
What is the Business Enterprise Tax credit?
The Business Enterprise Tax Credit is a refundable credit for qualifying individuals and corporations that invest in approved business ventures in New Hampshire.
Can I carryforward unused Business Enterprise Tax Credit?
Yes, it can be carried forward for up to five years.
What industries are eligible for the research and development tax credit in New Hampshire?
Eligibility primarily extends to high-tech and manufacturing industries which involve innovative technologies.
Is there a city or local sales tax in New Hampshire?
No.
Is there a Transfer Tax business owners need to pay ?
Yes, a transfer tax applies when the seller conveys a real estate property to a buyer.
How is the Transfer Tax calculated?
The tax rate which is equal to $15 per thousand dollar of price paid by the purchaser.
Have New Hampshire implemented VAT universally?
No.
Is the personal property of businesses subject to taxation in New Hampshire?
No, they are not.
Can I appeal my property tax with Department of Revenue Administration in New Hampshire?
Yes.
Can a business owner that lived at their business for the entire calendar year claim a Homestead Tax Benefit?
Yes, they may be eligible to claim the Homestead Tax Benefit.
Compared to the national average, how do taxes in New Hampshire fare?
New Hampshire generally has friendlier business environment compared to national average, given that their Tax Foundation scorecard largely remains “competitive”.
Who do I contact if I have more questions about taxes for my small business in New Hampshire?
You can contact the New Hampshire Department of Revenue Administration or a tax professional for more information on taxes for small businesses in New Hampshire.
What is the small business tax rate in New Hampshire?
The small business tax rate in New Hampshire is 8.5%.
How do I register for a New Hampshire business tax number?
You can register for a New Hampshire business tax number online or by completing the computer registration form.
What tax documentation is required for small businesses in New Hampshire?
Small businesses in New Hampshire are required to file business income tax returns, sales and use tax returns, and employment tax returns.
How often do I need to file taxes for my small business in New Hampshire?
Small businesses in New Hampshire are required to file taxes quarterly.
What is New Hampshire’s Business Profits Tax (BPT)?
New Hampshire’s Business Profits Tax (BPT) is a tax on a business’s taxable profits earned in the state during a tax year.
What sales tax must small businesses pay in New Hampshire?
There is no general statewide sales tax in New Hampshire.
Is there property tax on business equipment in New Hampshire?
In New Hampshire, there is no property tax on business equipment or machinery.
What deductions are available to small businesses on their New Hampshire taxes?
Expenses related to rent, payroll, office supplies, and advertising may be deductible by small businesses on their New Hampshire taxes.
Who do I contact for questions about New Hampshire small business taxes?
For questions about New Hampshire small business taxes, contact the New Hampshire Department of Revenue Administration.
What is the corporate income tax rate in New Hampshire?
New Hampshire does not have a corporate income tax.
How do I pay my New Hampshire business taxes online?
You can pay your New Hampshire business taxes online using the WebFile system.
Is a small business in New Hampshire required to pay the Business Enterprise Tax (BET)?
Small businesses earning over $150,000 in gross business receipts are required to pay the Business Enterprise Tax (BET) in New Hampshire.
How does filing taxes for a sole proprietorship differ from filing taxes for a partnership or LLC in New Hampshire?
For a sole proprietorship in New Hampshire, the income tax is paid on the individual’s personal tax return. Partnerships and LLCs file a partnership return and then issue K-1 statements to each owner for them to pay their individual share of the tax.
Are there any special tax exemptions for small businesses in New Hampshire?
Small businesses in New Hampshire may be eligible for the Research and Development Tax Credit, the Manufacturing Investment Tax Credit, or the Small Business Job Creation Tax Credit.
What is the Interest and Dividends Tax rate in New Hampshire?
The Interest and Dividends Tax rate in New Hampshire is 5%.
As a small business owner in New Hampshire, do I need workers’ compensation insurance?
In New Hampshire, employers are required to carry workers’ compensation insurance unless there are no employees.
What is the New Hampshire Health Insurance Premium Contribution (HIPC)?
The New Hampshire Health Insurance Premium Contribution (HIPC) program helps small businesses afford health insurance for their employees.
How are self-employed individuals taxed in New Hampshire?
Self-employed individuals in New Hampshire may be subject to both income tax and self-employment tax on their earnings.
Does New Hampshire tax dividends?
New Hampshire does tax dividends.
What is the tax rate for manufacturing businesses in New Hampshire?
Qualified manufacturing businesses in New Hampshire may be eligible for a reduced Business Profits Tax rate of 0.75%.
What is the New Hampshire Research and Development Tax Credit?
The New Hampshire Research and Development Tax Credit allows small businesses in the state to receive a credit for conducting research and development activities.
Can I claim federal income tax deductions on my New Hampshire tax return?
Yes, you can claim federal income tax deductions on your New Hampshire tax return.
How do I renew my New Hampshire business tax registration?
You can renew your New Hampshire business tax registration online or by submitting a Renewal Application to the Department of Revenue Administration.
What is the New Hampshire payroll tax rate for employers?
In New Hampshire, employers must pay a 0.5% NH Unemployment Tax on the first $14,000 in wages paid to each employee.
How much can I deduct for charitable contributions on my New Hampshire taxes?
Individuals in New Hampshire may claim up to $500 in deductions for charitable contributions on their state tax return.
Is there a tax credit for hiring veterans in New Hampshire as a small business owner?
Yes, the Veterans’ Employment Tax Credit provides employers with a $2,400 credit for hiring veterans in New Hampshire.
How does New Hampshire tax S Corporations?
In New Hampshire, S Corporations are taxed at the individual owner’s income tax rate rather than a corporate tax rate.
Are local taxes imposed on small businesses in New Hampshire?
Some localities in New Hampshire may impose additional taxes on small businesses, such as property taxes or business income taxes.
Can I deduct employee benefits on my New Hampshire taxes as a small business owner?
Yes, as a small business in New Hampshire, you may be able to deduct the cost of providing certain employee benefits.
Is there an estate tax in New Hampshire?
New Hampshire does not impose an estate tax.

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Conclusion

Understanding and complying with small business tax laws in New Hampshire is crucial for the success of your business. By staying informed about filing requirements, tax rates, deductions, and credits, you can make informed decisions that will benefit your business and help you avoid potential tax penalties. Consider consulting with a tax professional to ensure your small business fully complies with all applicable tax laws in New Hampshire.

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