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The Best and Worst States for Small-Business Taxes
High corporate income taxes or sales taxes can be a huge challenge for small businesses, depending on where they are located. So where does your state stack up?
Posted 2/ 19 11 at 11:00 AM | News, Money, Sales, Taxes & Accounting, Legal Issues
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Location, location, location: It's not only important when it comes to where you live or where you set up shop -- it affects the taxes you pay on business profits, the sales taxes your customers pay and the property taxes you pay on your facilities (directly as a property owner or indirectly through rent).So how does your location compare with other states? Each year, the Tax Foundation, a Washington, D.C.-based nonpartisan research group, conducts a survey to rank the states, factoring in corporate tax, personal income tax, sales tax, property tax and unemployment insurance tax.
Here are the results of the 2011 Small Business Tax Climate Index.
Best States for Small-Business Taxes
What makes a "good" tax state? Not having one or more major taxes -- corporate income taxes, personal income taxes, sales tax -- is important for a favorable tax climate. Low property taxes and low unemployment taxes that employers pay on wages to their staffs are also factors.
The best states for small businesses from a tax perspective are:
1. South Dakota: No corporate or individual income tax
2. Alaska: No individual income tax or state sales tax (there are some local sales taxes)
3. Wyoming: No corporate or individual income tax
4. Nevada: No corporate or personal income tax
5. Florida: No personal income tax
Worst States for Small-Business Taxes
What makes a "bad" tax state? These are the states that have complex tax rules with high tax rates.
The worst states for small businesses:
1. New York: The third-worst personal income tax, the ninth-worst sales tax and the very worst property tax
2. California: The second-worst sales tax and the third-worst personal income tax
3. New Jersey: The third-worst property tax and fifth-worst personal income tax
4. Connecticut: The second-worst property tax and, with the enactment of its "millionaire's tax," the third-worst personal income tax
5. Ohio: The fifth-worst property tax and the sixth-worst income tax
New Jersey had been at the bottom of the list for four consecutive years, but eliminating the top two personal income tax brackets so that the top rate fell from 10.75 percent to 8.97 percent moved it up in the rankings.
Barbara Weltman is an attorney, author of several business books including J.K. Lasser's Small Business Taxes and trusted professional advocate for small businesses and entrepreneurs. She is also the publisher of Idea of the Day and monthly e-newsletter Big Ideas for Small Business, both available at www.barbaraweltman.com, and host of Build Your Business radio. Follow her on Twitter at Twitter.com/BarbaraWeltman.
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Comments (Page 1 of 3)
OK, that makes a lot of sense dude.
www.being-anon.tk
Being in NYC and owning a business I was taxed so much I fired all 19 employees and became a one man operation. Between corporate /personal / commerical property and utility costs it was time for a "Change" so 19 people after 2 years are still out of work Thank you Zero bama and Bloomberg
Sounds like poor management to me. Maybe you were NEVER more than a "one man" business; Or a bad attitude turned you into one.
New Jersey may be high for property taxes, income taxes but in New Jersey for those taxes, it supplies you with more services than in states like Neveda. You do not want the services, well we can pay less taxes. North Carolina has low taxes, but charges sales tax on food at the grocery store, and user fees you to death. A cure for lower taxes is to control, the health insurance industry in what it charges us for insurance premiums. Lower Premiums in NJ would be a lower property tax to pay. Unions negotiate with our politicians. Its those A holes who got us in these trouble times, negotiating, and not thinking about what it costs us taxpayers. On the other hand, if you do not vote, shout your mouth.
sorry you lost - but taxes have less to do with a business' success - rather, you had poor knowledge of how the system works and how to plan your finances...next time find a good accountant and read the tax laws..
Why don't you move to Somalia? No government.
"The rich keep getting richer. Why?
Because they do something only 4% of all Americans do: They reinvest their money"
Oh God deliver me from such garbage thinking. The rich invest BECAUSE THEY GOT IT.
I think you must have been an abysmal business failure if you now do the job of 19 people you had hired.
And did you really track every single one of them for 2 years? Methinks ...
I agree with you. The government thinks they can just continue to take and take as if it were them earning it. I too am a business owner. I was based in NJ with 12 full time employees and multiple part timers. The tax rates were so outrageous that I sold my home and moved my home and my business to PA. Unfortunately only 4 of the full timers were able to continue employment. I have since replaced them all plus 2 with local PA employees.
Having had the oppertunity to work in NY also I see it even more business unfriendy than NJ was. The unions and the red tape have destroyed it
Anybody claiming that this guy doesn't know how to run a business because he had to fire all his employees has obviously never run a business before, nor do they intend to. You are just ignorant, and don't know what you are talking about.
Tim 3-07-2011 10:08AM
Anybody claiming that this guy doesn't know how to run a business because he had to fire all his employees has obviously never run a business before, nor do they intend to. You are just ignorant, and don't know what you are talking about.
---------------------------
Both your comment and the comment prior to yours, of which you are defending, are devoid of real thought.
A business does not fail or succeed based on the tax rates alone and that is what this article insinuates. Besides, if your margins are so low that you have to "fire all" of your employees, then your business model is obviously, not a successful one. Even then, you don't "fire" employees if you aren't making a profit. You lay them off / let them go. Just the use of the word "fire" tells me the guy doesn't know what he is talking about. You fire someone who is being insubordinate, stealing from the company or otherwise related and severe termination issue.
Wisconsin should be in the 'worst' state top five. It's a welfare state that drives business away. But, if you want to be in prison, get a few DUI's in Wisconsin, sell an ounce of marijuana and you'll be fed and lodged for a long time. Prison is our 'big' business; but, don't spit on the street - you'll only get 30 days in jail and then you are back out in the cold.
Incidentally, I've never been in prison, so no 'sour grapes' here.
You cannot compare NYC to anyplace in the world. If the taxes there were 100%, it would probably still be able to survive. It is still the financial hub of the world. Upstate New York, however is very depressed when you factor out NYC.
You cannot defeat common sense and common sense says that you bring businesses to states where it is cheaper to conduct business- particularly if you are a chain that operates in many states.
Successful,high-growth business start-ups require access to three things - capital, talent, and new ideas - to succeed. None of that was measured by this survey. Leave it to a group of tax professionals to say it's all about taxes. Our esteemed governor in Wisconsin brought his message of cutting taxes and regulations to a major statewide conference of entrepreneurs and investors, and was incensed when he did not get a standing ovation (which he did the following week at a meeting of CEOs from large corporations). Lawyers and accountants just don't get it some days.
The rest of New York State pays to carry New York city!
What the article shows very clearly is that there is NO relationship between business activity and taxes. The states with the highest taxes have a far better business climate and far more businesses headquartered in those higher tax states. The high tax states of NJ NY CT also have lower unemployment rates and far less bank failures. The state with the lower taxes have far less businesses in those states and in they have far less corporation headquarters located in their states and they have far more bank failures than most states have..
If all it took was low taxes____Florida and Nevada would not have a higher percentage of vacant foreclosed homes than either NJ, NY, or CT. The populations of Nevada, Wyoming, Alaska, S. Dakota all added together do not equal the population in NYC So even with low taxes no one wants to live in those state. The entire population of Alaska in 10 times lower than the population in Houston
I also wonder if all of these rates weren't just the opposite when Wall Street began or when Las Vegas was carved out. Every entity involved likely tries to raise taxes on high revenue areas every chance they get. Clearly a business office can be relocated and maybe alot of them are officially incorporated in other states. I do know that the majority of credit card companies are incorporated out of Delaware due to tax advantages and other factors. Atleast there is a choice. I'm sure Trump and his colleagues will make it.
Sgentilejr: You make perfect sense; however, Florida and Nevada mde it too easy for unqualified people to buy houses, hence the high foreclosure rate. They also have high unemployment rates.
Hedonists, with little money, like Florida and Nevada. Same with Arizona. Hedonists, as you know, are pleasure-seeking people.
With this economy, you will see more people moving to North/South Dakota and Wyoming. I've been to every state but Alaska and I like those three lowly populated states, especially Wyoming; I'd move there in a minute but I'm retired, stuck in Wisconsin for medical reasons and need to be near Milwaukee and Chicago for personal reasons. We have high taxes in Wisconsin but outstanding medical and educational benefits (when the doctors and teachers decide to work).
On Connecticut second worst property tax. I live in Ct. It depends on what part on Ct. I live in northeastern part, property taxes are average. Southwestern part, high. It is amazing R.I. was left out. On worst income tax. R.I. taxes Social Security benefits for retirees, Ct. doesn't only if a person makes over $50,000 single, $60,000 married. R.I. taxes all of S.S. benefits for retirees. R.I. is one of the worst states for retirees. I don't know where Barbara Weltman gets her infomation?
Shocking facts from the US census Bureau:
1/3 of all Americans has zero net worth
Half of all Americans have no more than $2000 anywhere.
1% of all Americans own 90% of the retirement money out there.
The rich keep getting richer. Why?
Because they do something only 4% of all Americans do: They reinvest their money monthly, quarterly and create never ending cashflows that they can live off forever regardless of where the stock market goes.
Learn the truth, now!!
Go on Yahoo or Google: search for "The Complete Dividend Plan"
Take it from me: I am nothing. A nobody. Just an average American with a family to take care of. Yet in my mid 40's I am now receiving over $1200/ month in reinvestable income. By the time I am 65 I will have almost $9000 / month in reinvestable income coming in, and that doesnt include social security and pensions, etc.
Learn the truth, the facts and stop listening to Wall Street and CNBC.
"The Complete Dividend Plan"
Search for it on Yahoo or Google right now.