While the Granite State has neither a broad-based income tax nor a general sales & use tax, the State does have a number of taxes that do impact both businesses and individuals. This article will outline the New Hampshire Business Profits Tax (Statute – RSA 77-A & Administrative Rules –Rev. 300) (“BPT”) and the Business Enterprise Tax (“BET”).
The BPT and BET are administered by the New Hampshire Department of Revenue Administration (“DRA”). The BPT is an entity level apportioned net income tax imposed upon all business organizations which carry on any business activity in New Hampshire including corporations, limited liability companies, partnerships and sole proprietorships. The State uses an economic presence standard rather than a physical presence standard to determine if the organization has a connection (i.e. “nexus”) with NH and is subject to the tax.
A BPT return must be filed if a business organization’s gross business income exceeds $50,000. Gross business income is from all sources and not limited to NH sourced income. The current BPT rate is 8.5% of taxable business profits. BPT returns are due on the 15th day of the third month following the end of a corporation’s tax year and the 15th day of the fourth month following the end of a proprietorship’s or partnership’s tax year.
Quarterly estimated tax payments must be made if the business organization’s annual estimated BPT liability is greater than $200. Various credits (dollar for dollar reductions in tax) against the BPT are available. The Business Enterprise Tax is the most common.
The Business Enterprise Tax (Statute – RSA-E & Administrative Rules – Rev. 2400) or “BET” is an entity level tax imposed on all business enterprises (slightly different than “business organizations” for BPT) which carry on activity in NH including corporations, limited liability companies, partnerships, sole proprietorships and certain non-profit organizations. Unlike the BPT, the BET statute does not provide for an economic presence standard and a physical standard may be applicable to determine if the organization has nexus with New Hampshire.
A BET return must be filed if a business enterprise’s gross receipts exceed $207,000 or if its enterprise value tax base is greater than $103,000. Gross receipts is from all sources and not limited to New Hampshire sourced receipts. The BET is imposed at a rate of .75% on the enterprise value tax base. The BET return is required to be filed at the same time the BPT return is filed. Quarterly estimated tax payments must be made if the business enterprises’ estimated annual BET liability is greater than $200.
This particular startup owner was going to purchase an existing restaurant facility so he had questions about the NH Meals, Rooms and Rentals Tax (Statute – RSA 78-A & Administrative Rules – Rev. 700).
The Meals and Rentals Tax is a tax imposed at a rate of 9% on taxable meals, occupancies and rentals of vehicles. Hotels, seasonal home rentals, restaurants and vehicle rental agencies are required to register with and obtain a license from the DRA prior to serving taxable meals, renting rooms or vehicles.
Hotels, restaurants and vehicle rental agencies collect the tax from their customers and pay the tax on a monthly return due by the 15th day of the following month. Electronic filing and payment is required to be used (with limited exceptions) and the failure to do so results in a forfeiture of the 3% commission that the operators are allowed to retain for collecting and remitting the tax to the State.
At Welts, White & Fontaine, P.C. our lawyers have experience representing owners of closely held businesses in a wide array of industries including professional practices, technology companies, manufacturers, car dealerships, franchisees, restaurants and a wide array of small businesses. We believe in the team approach to business law and work with high quality payroll, book keeping and accounting/CPA firms as a team of trustee professionals. Together we can help guide you through a successful navigation of New Hampshire’s business transaction and tax landscape. Please contact Attorney John Polgrean if you have questions or concerns about your business planning endeavors. (603) 883-0797. [email protected] or fill out our Contact Us form.
Author: John Polgrean
This blog is intended for informational use only. The information contained herein should not be construed as offering legal advice or a legal opinion.
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