One of the few states in the US without a state income tax is New Hampshire. This does not imply that companies are excused from paying taxes, though. In New Hampshire, taxes are imposed in particular on partnerships.
For taxation reasons, partnerships are regarded as “pass-through” entities, which means that the business’s gains and losses are distributed to the partners and reported on their individual tax returns. Partnerships in New Hampshire must submit a Business Profits Tax (BPT) return if their gross business income exceeds $50,000 or their distributive portion of partnership income is greater than $2,500.
The BPT is a tax imposed on net income from New Hampshire-based business operations. Currently, the rate is set at 7.7% for the 2021 tax year. The Business Enterprise Tax (BET), which is a tax on the enterprise value tax base of the business, is also applicable to partnerships. Currently, the BET rate is 0.6%.
Whether a tax ID number is required to sell on Etsy is another often asked issue. Yes, you must have a tax ID number if you are conducting business on Etsy. This is so because Etsy views sellers who are selling goods with the goal of turning a profit as running a company. You can apply for an Employer Identification Number (EIN) with the IRS in order to get a tax identification number.
A common question is whether an internet seller needs a business license. The state and local laws will determine the answer to this inquiry. You are not need to apply for a business license in New Hampshire if you are running a company under your own name. To obtain a Trade Name Certificate, you must apply at the Secretary of State’s office if you are using a trade name.
And lastly, how much income must you earn from Etsy to file taxes? You do not have to submit taxes if you are using Etsy as a hobby and not earning a profit. However, you must file taxes with the IRS if you sell on Etsy as a business and have more than $400 in net earnings. This involves including a Schedule C with your individual tax return so that you can list the revenue and costs from your business.
In conclusion, notwithstanding the absence of a state income tax in New Hampshire, partnerships are nevertheless liable to BPT and BET taxes. You will need a tax ID number and perhaps need to register for a trade name certificate if you are selling on Etsy on behalf of a business. Additionally, you must submit taxes with the IRS if you make money on Etsy. To maintain compliance and prevent fines, it’s critical to keep up with the latest tax legislation.