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  • Business Tax Basics for Beginners

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    Understanding State Business Taxes

    Your business tax obligations don’t stop at the federal level. State and local government agencies want slices of your revenue, too.

    State income taxes
    Nearly every U.S. state has a business or corporate income tax on their books and your tax requirement depends on the legal structure of your business. For example, a Limited Liability Company (LLC) is taxed separately from the business owners, while sole proprietors use the same tax form to report personal and business income taxes.

    State employment taxes
    In addition to federal employment taxes, you must pay certain state employment related taxes as well. All states require payment of state workers’ compensation insurance and unemployment insurance taxes. The following states or territories also require businesses to pay for temporary disability insurance:

    • California
    • Hawaii
    • New Jersey
    • New York
    • Rhode Island
    • Puerto Rico
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    Game Plan

    • Consult with your tax professional if you have questions about federal and state tax laws.
    • Visit your state’s website for small businesses.
    • The U.S. Small Business Administration has many tax-related resources.