Hoping you experienced guys can shed some light on this for me. When starting an LLC, the state of Connecticut requires me to pay a Business Entity Tax…is this different than a Sales and Use tax permit?
I browsed through the list of contractor jobs (installing baseboard, building a shed, constructing walls, whatever) and none of the jobs that I would do require me to charge the customer sales tax…so I’m assuming that this Business Entity Tax is not the same as a Sales and Use Permit…right?
Here’s what it says on the website:
Most products and services sold are subject sales tax. Additional taxes may also apply depending on the business entity and the type of business activity. For example, the business entity tax for limited liability companies, the corporate tax for corporations and the cigarette tax if selling cigarettes. Tax registration numbers will not transfer to new businesses or business locations. To apply for your Tax Registration Number use form REG-1. Application fees vary with the type of business and start at $50. To research whether your product or service is subject to sales tax call (860) 297-5962 or 1-800-382-9463 or visit the Department of Revenue Services (DRS) at www.ct.gov/drs or . Also, see the online publications Sales and Corporate Tax Guides and Other Publications to Assist you.
Note: A $250 Business Entity Tax is applied to the following entities (file form REG-1):
- S-Corporations
- Limited Liability Companies
- Limited Liability Partnerships
- Limited Partnerships
Justin Fink – FHB Editorial
Replies
A Business Entity Tax is not the same thing as a Sales and Use Tax. Think of it as a tax on the privilege of running a business as a corporation rather than as a sole proprietorship or partnership. Whereas the Federal government lets S corporations (and LLCs, too? I'm not sure) pass their income through to the individuals running them, and doesn't charge the business itself any corporate "income" tax (the way it does with C corporations, in contrast), it looks like Connecticut wants a cut at the corporate entity level for these types of corporations, too.
Many *cities* charge business taxes. I never heard of a *state* charging one before, but that doesn't mean anything at all other than that I haven't heard of much.
According to the web site you quote, the business entity tax, corporate tax, and cigarette tax are examples of other taxes *besides* sales tax that a business may have to pay.
If you're starting a LLC, it looks like, as a minimum, you'll need to pay a minimum $50 fee to apply for a tax number and a $250 business entity tax.
Aviso: I'm not a lawyer *or* a tax specialist.
Rebeccah
Welcome to doing business in Connecticut. Prepare to learn to hate the government.
Andy
"Never try to teach a pig to sing. It wastes your time and annoys the pig." Robert A. Heinlein
"Get off your dead #### and on your dying feet." Mom
none of us are in the postion to "charge" tax
we do however collect it for the state , with a sales tax number my purchases for resale are tax exempt we collect the tax when we bill the customer for materials and then turn it over to the state. lots of wholesalers wont sell to you without a sales tax number
Edited 3/13/2006 2:55 pm ET by skip555
Thanks for the help guys. Uncle Sam's obviously gonna take a nice big bite outta my....well, you get the idea.Justin Fink - FHB Editorial
would you like fries with that?
Here, I have to certify, affidavit, yada yada yearly, that I am in no way involved in agriculture, produce anything that looks like agriculture, or own any land that someone might be growing something on. Ban on corporate farming. Gotta love the politicians. If I'm late in returning, the corporation is automatically , what do you call it, unincorporated? "A bore is a man who, when you ask him how he is, tells you." -Bert Taylor
I have two comments:
-They really mean your about to be paying taxes not charging taxes
-Just be thankful you're not in California. They're so far in debt that they charge taxes before the actual transaction. In fact, just thinking about a money making venture is taxable so we encourage everyone not to think (like the politicians do).