All LLCs in New Hampshire are taxed at the state and federal levels, and a business owner is mandated to meet these expenses and obligations while starting or running an LLC.
Understanding the tax obligations for both federal and state governments is important to remain compliant and avoid penalties.
In this article, we will discuss the process of IRS tax return filing for New Hampshire LLC, focusing on classifying the taxes, reporting the taxes, deadlines, and other relevant details.
Federal Tax Filing Requirements For New Hampshire LLCs
By default, the IRS considers LLCs as pass-through entities, which means the owners of the LLC would report the company’s tax burden on their tax returns.
But, depending on the LLC tax classification, tax obligations would differ. Knowing how your LLC is taxed makes it easier to report income, deductions, and forms timely.
1. Single-Member LLC
For federal taxes, single-member LLCs are disregarded entities. This simply means:
- The owner does not have to file a separate tax return for the business. The owner’s personal income tax return suffices for filing.
- The owner has to fill out Schedule C (Form 1040) to report business income and other expenses.
- Social security and medical insurance self-employment tax is charged.
- Estimated taxes may need to be filed if tax payments exceed $1000.
2. Multi-member LLC (Limited Liability Company)
An LLC multi-member, by default, is classified as a partnership. It’s necessary to submit:
- 1065 form (U.S. Return of Partnership Income) is filed for reporting business revenues and expenses.
- For example, Schedule K-1 (Form 1065) needs to be filed for each member to report each member’s portion of profits, losses, deductions, and credits.
- All members must report their portions of income on their tax returns under Form 1040.
- Furthermore, an LLC member may be personally liable for self-employment taxes if the member is participating in business activities.
3. LLCs electing corporation taxation
Certain LLCs decide to be taxed as C-type corporations for tax benefits.
- An S Corporation will file under the 1120 S form, and the profits and losses of the business are passed to the owners who pay them out using Schedule K-1. The owner is not liable for self-employment taxes on salaries.
- C Corporations fill a 1120 form and directly pay taxes as a corporation. In this case, the corporation is liable to pay taxes as a corporation, and the shareholders are still subject to tax on the dividends they receive.
Tax Obligations of New Hampshire State for LLCs
Unlike most other states, New Hampshire does not apply a standard sales tax or basic state income taxation, however, an LLC is still liable to certain taxes concerning expenditures, income, and gross receipts.
1. Business Profits Tax (BPT)
- For Limited Liability Companies (LLCs) whose revenue exceeds $92,000 (up from $80,000 in 2023), this profit tax applies as of 2024.
- This category’s tax is fixed at 7.5% of net income after all deductive allowances are taken into account.
- Form NH-1120 is required for this category, and it should be directed to the New Hampshire Department of Revenue Administration.
- Should there be any additional payments from the prior year, those need to be submitted earlier in the year, estimating each payment for the quarter.
2. Business Enterprise Tax (BET)
- This profit tax applies to LLCs that qualify for gross earnings of more than $281,000 or hold at least $281,000 in enterprise value tax base (for the year of 2024).
- This category has the lowest Business Profits Tax of 0.55%. It is levied on enterprise value and includes compensation, dividends, and interest into account.
- LLCs must file BET-80, in which they declare any taxes due to be paid. This is done annually rather than all at once.
- BET credit can frequently substitute for remittance of Business Profits Tax.
Employment Taxes for LLCs with Employees
Should your LLC be based in New Hampshire and have employees, you’ll have some additional obligations, like:
- Federal Income Tax has to be accounted for alongside payroll tax withholding from employee wages.
- A combination of filing for quarterly Form 941 and annually remitting Form 940 has to be submitted together for the Federal Unemployment Tax.
- State unemployment tax is required through the New Hampshire Employment Security (NHES) agency.
- Employers may also need to pay workers’ compensation insurance, depending on business operations.
Deadline for Filing
In terms of tax payment, deadlines are critical. LLC owners should be cautious about the following deadlines to avoid penalties:
March 15: This is the cutoff date for multi-member LLCs (Form 1065) and S Corporations (Form 1120-S).
April 15: This is the cutoff date for single-member LLCs (Schedule C on Form 1040) and C Corporations (Form 1120).
April 15: New Hampshire Business Profits Tax and Business Enterprise Tax (BPT and BET, respectively) are payable by this date.
Estimated tax payments are supposed to be paid on April 15, June 15, September 15, and January 15 of the next year.
Having Tax Filings Delayed
If tax returns are not filed or paid by their set deadlines are breachable, serious restrictions will be imposed. Most prevalent penalties LLC owners are likely to come across include, but are not limited to:
Federal Penalties: Range from a failure to file a 5% fee every month on unpaid taxes. In total, this unclaimed tax can total 25%.
State Penalties: Interest charges accompanied by BPT and BET tax payments delays will multiply with time and result in sharper penalties.
Failure to Pay Penalty: doesn’t amount to a balance, however will be placed at 0.5% every month but reach a total of 25%.
Interest Charges: Unpaid taxes accrue interest at a rate the IRS and New Hampshire tax authorities determine.
Payroll Tax Violations: Any business that does not withhold or pay payroll taxes promptly faces stiff penalties, which may include heavy fines and lawsuits.
Tax Deductions for an LLC in New Hampshire
New Hampshire LLCs should utilize the available tax deductions to decrease tax obligations. These include, but are not limited to:
Office Costs: Rent, utilities, internet services, and office supplies.
Vehicle Costs: Fuel, maintenance, and mileage deductions for business use of the vehicle.
Employee Compensation: Payroll expenses, health coverage, and retirement plans for employees.
Advertising and Promotion: Website creation and maintenance, digital marketing, and promotional materials.
Business Related Professional Fees: Legal, accounting, and consulting business expenses.
Impairment: The depreciation expense of equipment, vehicles, and office furniture.
Business Travel Expenses: The expenses associated with traveling, lodging, and dining for work purposes, given the IRS regulations.
How EasyFiling Can Help New Hampshire LLC Owners with Their Taxes
Tax filing is no walk in the park, but thanks to EasyFiling, it’s easier than ever. We specialize in guiding LLC owners to remain compliant while optimizing their tax savings. This is how we can help:
Tax Filing Consultation: With EasyFiling, LLC, owners don’t have to worry about their tax classification, tax obligations, or deductions. Our specialists are ready to help.
Filing Accuracy: We facilitate the prompt filing of state and federal taxes, which reduces the risk of errors or penalties.
Tax Burden Optimization: We ensure that all eligible tax deductions are taken, reducing the burden of self-employed taxes while increasing profitability.
Ongoing Yearly Assistance: Estimated tax payments? Annual filings? EasyFiling will help your business stay compliant year-round.
Streamlined Services: EasyFiling makes it easier for business owners by offering payroll and bookkeeping services.
Conclusion
Understanding both the federal and state obligations would best serve New Hampshire LLC owners in recouping tax returns and legally minimizing taxes owed.
All LLCs, whether sole proprietorships, partnerships, or corporations, must adhere to IRS rules and New Hampshire tax codes.
Consider utilizing an EasyFiling expert to guarantee all tax returns are filed precisely to maximize tax returns and minimize payments.
With proper organization and information, accidentally incurring financial penalties can be avoided while successfully reducing tax burden and focusing on business growth.
Frequently Asked Questions (FAQs)
1. What is the state-level income tax for LLCs in New Hampshire?
New Hampshire does not have a broad state income tax, but LLCs are subject to the Business Profits Tax (BPT) and Business Enterprise Tax (BET).
2. What documents does a single-member LLC need to submit in New Hampshire?
Single-member LLCs will complete a Schedule C (Form 1040) with the IRS and might need to file a NH-1120 for the state.
3. What’s the best way to lower an LLC’s tax burden?
Write off business expenses like rent, employee salaries, advertising, and depreciated equipment.
4. What happens if I don’t file my taxes on time?
Filing taxes after the deadline may incur an additional charge, such as 5% of unpaid federal taxes, or state penalties for unpaid BPT or BET.
5. Can EasyFiling assist me with filing taxes for my LLC?
Sure, EasyFiling offers compliance and filing assistance along with bookkeeping services for LLC owners to ensure all tax responsibilities with the IRS and state are done properly and timely manner.
Nabin Adhikari
