New Hampshire Business Taxes: Explained

Although New Hampshire is referred to as the “Live Free or Die” state, the state has its own set of tax laws. When opening a business in a state, one of the first inquiries prospective business owners may have is whether or not there is a minimum tax. Yes, New Hampshire does have a minimum tax, but it differs from minimum taxes in other states.

The “business profits tax” or BPT is the name of the state’s minimal tax. The BPT is a tax levied against the state’s commercial enterprises’ profits. The tax is computed using the net income of a company, and the rate is now 7.7%. All businesses operating in the state, including corporations, partnerships, limited liability companies (LLCs), and sole proprietorships, are subject to the BPT.

But there are no personal income taxes, use taxes, or sales taxes in New Hampshire. Due to this, the state is a desirable location for business owners wishing to launch a new venture or relocate an existing one. Businesses operating in the state may significantly benefit financially from the lack of these taxes. Who Must Submit an NH 1120?

A business profits tax return, commonly known as the NH 1120, is required to be filed by any company doing business in New Hampshire. This includes companies who are exempt from paying the tax because of their low income. The NH 1120 is due on the fifteenth day of the fourth month after the tax year’s end. If a company’s tax year ends on December 31, for instance, the NH 1120 is due on April 15 of the subsequent year.

How much tax is an LLC required to pay? In New Hampshire, LLCs and their owners are subject to the same taxation. Instead, the LLC’s gains and losses are transferred to the owners, who then report them on their individual tax returns. This indicates that the business gains tax does not apply to LLCs. The LLC must, however, pay both state and federal payroll taxes if it has employees.

The tax rate on corporate profits in 2021 is 7.7%. The rate is the same as it has been since 2018. The state legislature has the authority to alter the rate, so it’s crucial to be aware of any modifications that could affect your company.

In conclusion, New Hampshire does have a minimum tax in the form of a tax on corporate earnings, but the absence of a personal income tax, a sales tax, and a use tax can be quite advantageous to firms that operate there. Regardless of whether they are compelled to pay the tax or not, every firm operating in New Hampshire is required to submit a business profits tax return. LLCs must pay state and federal payroll taxes if they have employees even though they are exempt from the business gains tax. The state legislature may decide to alter the 7.7% commercial gains tax rate for 2021.