{"id":4631,"date":"2016-04-04T10:47:36","date_gmt":"2016-04-04T15:47:36","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/smallbusiness\/business-taxes\/state-and-local-taxes-introduction.html"},"modified":"2024-05-23T02:03:55","modified_gmt":"2024-05-23T07:03:55","slug":"state-and-local-taxes-introduction","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/smallbusiness\/business-taxes\/state-and-local-taxes-introduction.html","title":{"rendered":"State and Local Taxes: Introduction"},"content":{"rendered":"\n
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State and Local Taxes: Introduction<\/h1>\n
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If you’re thinking about starting a small business<\/a>, it doesn’t matter where your new business operates, it will need to pay certain state and local taxes, in addition to those required by the federal government. Since tax laws pertaining to small businesses can vary among jurisdictions, it’s critical that you check with your state and local government revenue or taxation office to determine the tax obligations of your new business. Keeping this in mind, the following is a general discussion of the typical state and local taxes for small businesses.<\/p>\r\n

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State Income Tax<\/h2>\r\n

All businesses must pay state income taxes. Some businesses, such as corporations<\/a>, are taxed as separate entities for income purposes, while the income of other businesses is not taxed separately from the income(s) of their principal owner(s). For example, in most states, a sole proprietorship’s income and expenses are included on the personal income tax return of the sole proprietor. Partnerships and limited liability companies<\/a> (LLCs) are also often taxed like a sole proprietorship, although LLCs may elect to be taxed like a corporation.<\/p>\r\n

State business income tax is typically a pay-as-you-go tax, meaning businesses usually must pay the tax as income is earned throughout the year. As a business, you may be required to make estimated tax payments during the year. If you are not required to make estimated tax payments, you may pay any tax due when you file your business or individual income tax return at the end of the tax year in April.<\/p>\r\n

To learn more about business income tax obligations, how to pay your business income tax, and other business regulations in your state, you can visit the Internal Revenue Service (IRS) website, which provides links to the state governments<\/a> of all 50 states.<\/p>\r\n

State Employment Tax<\/h2>\r\n

If you intend to hire employees<\/a> for your new business, you should be aware that employers are required to pay certain employment-related state taxes, in addition to those required by the federal government. Depending on where you operate your business, your state employment tax<\/a> obligations can include:<\/p>\r\n