Your business needs to stay on top of its tax obligations, no matter how big or small.
Understanding tax rates, laws, and other information helps you create strategies for addressing your tax bill and lowering your tax obligations, all while staying within the letter of the law.
The best way to do this is by finding out which states are the most tax-friendly for business.
Read on so that you can learn more about the best states for business taxes.
What Are the Best States for Business Taxes?
You stand to gain some advantages when you operate in a state that is tax-friendly toward businesses of all sizes and types.
The better you handle your taxes, the more effortlessly you will remain on the right side of the Internal Revenue Service (IRS) each and every year. You will also improve your company’s profit margins since taxes won’t be eating away at your earnings.
Here are the 10 most tax-friendly states that you should get to know:
When looking into an overview of Florida’s tax rates, you’ll find it among the most tax-friendly states across the board. Its pro-business tax policies draw companies from Disney to Publix, and the encouraging trade atmosphere is great for long-term growth.
The state doesn’t charge a personal income tax, so your clients will have the opportunity to spend more. This potentially increases your revenue every year.
The unemployment insurance tax in the state of Florida is also very low when compared to other states. The corporate income tax in the state of Florida is just 5.5 percent, which is also one of the lowest in the country.
Not only does Montana not charge its residents any sales tax, but they are also one of the few states that has a hard cap on how much sales tax they are even able to charge.
Throw in the fact that the Big Sky state has an amazingly low cost of living and it’s a no-brainer why companies like Bozeman Health and Glacier Bancorp have set up shop.
According to the constitution in the state of Montana, they are not able to charge any more than 4 percent in sales taxes.
Further, the state charges a corporate tax of 6.75 percent, also making it one of the more tax-friendly states around.
The state of Oregon also has one of the most tax-friendly setups that any business will enjoy.
They don’t charge any state sales tax. If you own a retail shop, you will be able to see consistent sales both from residents and tourists who are seeking some relief.
The state charges 7.6 percent in corporate taxes as well.
Oregon is a place where small businesses can thrive because the majority of business types outside of corporations don’t have to pay excise tax. This extra bit of income can free up capital so that your business can really make a mark.
When you are trying to open your business in a tax-friendly state, they don’t get much better than Wyoming.
The state is tops in a number of categories — including the fact that it doesn’t charge individual income tax. Further, Wyoming has 0 percent corporate income tax, which is friendly for any business type.
Like other states, Alaska doesn’t charge any sales tax to shoppers. This 0 percent sales tax makes for a thriving retail economy as a whole and can help boost your sales margins.
As you might imagine, this tax-friendliness has worked out for plenty of Alaskan companies, from Alaska Air to Bristol Bay Native.
Alaska also doesn’t charge a franchise tax or a privilege tax that you might be responsible for in another locality.
Nevada is among the states that don’t levy a state personal income tax for its residents.
Since it’s one of the biggest tourist capitals of the world, you open yourself up to a widespread and attractive new clientele. In terms of business taxes, companies aren’t responsible for either corporate tax or personal income tax in the case of sole proprietorships or Limited Liability Companies (LLC).
The fact that the state is so tax-friendly, along with a reasonably low cost of living, makes Nevada one of the best states to open up a new business.
In the state of Utah, both the individual income rate and corporate income rate are 5 percent.
These rates make Utah among the best states to open a company from a tax standpoint. As a matter of fact, man experts have ranked Utah number 1 when it comes to a business-friendly state.
8. New Hampshire
New Hampshire has also grabbed the top ranking by some experts as a place to do business.
The state ranks in the top 10 on a regular basis for a number of reasons. The tax rate is about 7 percent for corporations, and the personal income tax is 5 percent.
While Deleware is smaller than close to 90 percent of states, it is also one of the most business-friendly.
You will be subject to corporate tax rates of less than 9 percent, and the state has 0 percent sales tax. The proximity to many other east coast states also makes it great from a commerce point of view.
Take Great Care of Your Business Taxes
These are the best states for business taxes, so you should definitely consider these points when you are trying to set up shop in a new location or take advantage of tax breaks where you already live and work.
Anytime you are running a business, you owe it to yourself to get to know the tax implications each and every year. Whether you’re already in these states or are planning to set up shop elsewhere, keep these points in mind.
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