Local taxes in the US may seem daunting. First, you'll have a state tax, which a state-wide office of taxation or finance handles. Then, depending on which state you register your business in, you may pay a county tax as well. To further complicate matters, every April you have to make sure you're up to speed on all of your state and local tax codes to be sure your business doesn't end up owing back taxes.
Before local state tax in the US overwhelms you, take some time to get to understand your state and local taxes. Once you do the following things, you'll be ready to file your state and local taxes.
1. Compare states with local tax before registering your business to find the best state for you to operate in
2. Find all of the state and local tax code listings for the state in which your business resides
3. Have the understanding and background to file your business's state and local tax-or hire a qualified professional
Action Steps
The best contacts and resources to help you get it done
Compare states with local tax before registering your business
If you haven't already found a state to house your business in, try comparing state and local tax by state to determine which state might be best for your business.
I recommend: The Tax Foundation publishes comparisons of state corporation taxes every year. It's a good way to research state tax by state. In many states, sales tax encompasses the bulk of local taxes in the US. Compare the
rates of states' sales taxes in TaxAdmin.com.
Read the laws on your state and local tax code listings
The tax code is a law that specifies how to tax individuals and businesses. With a little time and focus, you too can understand these complicated laws.
I recommend: Read your state's tax code by choosing your state from the list of 50 plus Washington D.C. on
FindLaw.
Contact your local state tax office by searching the Federal Internal Revenue Service map.
Register your business and start filing your state and local tax
Once you've chosen where your business will reside, you'll need to register your business in that state and begin filing.
I recommend: Register your business on the web starting with the Federal Internal Revenue website. Here you can find
links to each state's tax department as well as links to
state and local tax courses and workshops.
Find an accountant to help you file and understand state and local tax code listings
With years of training under their belts, even the most junior accountants have a good understanding of tax in the US. Hire a CPA to help you understand states with local tax or file taxes for your business.
I recommend: Find a qualified certified public accountant through the
American Institute of Certified Public Accountants or the
American Association of Attorney-Certified Public Accountants.
Tips & Tactics
Helpful advice for making the most of this Guide
- If you cannot find your state and local tax code listings online, make a phone call to your city hall. Don't assume that you have no local tax obligation.
- Do your own research before hiring a professional. If you are knowledgeable, you increase your chances of finding and hiring a knowledgeable accountant to file your local state tax.
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