Does Your State or City Tax S Corps? | Sole Proprietorship vs. S Corporation

Does your state or city tax S corporations? If you do business in Tennessee, New Hampshire, California, Illinois, New York City you may have to pay taxes that you wouldn't have to pay if you were a sole proprietor. In this video I discuss:
1. What states levy taxes on S Corporations?
2. What cities levy taxes on S Corporations?
3. Does it still make financial sense to be taxed as an S Corporation if your State or City will tax the S Corporation?
Specifically, I discuss Tennessee Excise Tax, New Hampshire Corporate Tax, New York City corporation taxes and California Franchise taxes.
Take what you learn from this video and ask your legal or tax professional all of your specific questions. If you want to contact me, my information is below.
If you learned something from this video, please like and subscribe and follow me on my various social media handles below. If you would like to contact me with a specific question, please visit my website or leave me a comment.
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This video was created for informational purposes and it is not to be construed as legal and tax advice specific to your unique situation.
© Navi Maraj CPA PLLC. All rights reserved.
#LLC #SCorp #Taxes

[@thomasbrown6665]

Can you make a video specifically about New York City?

[@scentilatingone2148]

Thanks. Just moved to TN

[@Alpha-hm7sv]

What is the best option form a Business LLC to minimize a capital gain tax from a stock market for an individual - is it LLC with S-corp or C-corp? Thanks.

[@lemoinefamilyfun2142]

I live in Tennesse - so I've been struggling with the decision do I form my LLC in TN (about $300) or form it in Nevada (est. $700). My understanding is TN can then only do the Excise tax on transactions within their state only. everything else belongs to Nevada & NV does not have an excise tax. Am I on the right track with this info or in mythology land?

[@devg2322]

Thanks alot for this video! In NYC, do you know whether that extra 8.85% tax is on the net profit, or net revenue? or Gross revenue?

[@NaviMarajCPA]

Hi @Dev G...thanks for watching. Per the sources I reviewed when preparing this video it is on the net profit of the business.

[@devg2322]

@@NaviMarajCPA Thanks so much and sorry to bother, but i have one more question. If I move to Upstate NY, but still do maybe 50% of my business is NYC, would I be able to avoid that 8.85% city tax?

[@NaviMarajCPA]

I’m not sure as I personally don’t have clients in NYC but my thought is that you would still pay the city tax on the amount of profit that was made within NYC limits. You probably want to talk to a tax professional that is experienced with NYC to go about it the right way.

[@devg2322]

@@NaviMarajCPA Sweet, thanks! Dont forget me, I was amongst your early subscribers! hahaha good luck

[@NaviMarajCPA]

@@devg2322 I’ll give you a shoutout when I hit 10k. Hold me to this if you don’t see the video/post or whatever I decide to do. Thanks for the support!

[@patrickmele5606]

I was recently told by two accountants that NYC changed how they treat SCorps. Is this true? Both accountants told me that distributions are no longer subject to Self Employment tax. I am struggling to find information to support this. Thoughts?

[@patrickmele5606]

*edit -- I meant to write income from SCorps are no longer subject to the 8.5% corporate tax.

[@NaviMarajCPA]

I wasn’t able to confirm that this is no longer the case. My recommendation is to seek assistance from someone familiar with S corporations in New York City specifically as it has some quirky nuances that alot of tax professionals aren’t aware of.

[@lucas3lucas]

Can you share the list of states and cities?

[@NaviMarajCPA]

Hi @Lucas! Thanks for watching. You can use think link as a guide: www.nolo.com/legal-encyclopedia/50-state-guide-business-income-tax.html

[@lucas3lucas]

How about Fairfax Virginia?

[@NaviMarajCPA]

I think you’re safe in Virginia...check the link I sent you in your other message.

[@dakotafleming5261]

Does the State of Oklahoma tax S-Corps?

[@nizzyneyrogers1181]

I live in NYC and I learned this the hard way smh

[@NaviMarajCPA]

Hi @nizzyneyrogers...thanks for sharing your personal experience as others will learn from it. Just curious...did you get bad advice or did you make the decision on your own to become an S Corp in NYC?

[@nizzyneyrogers1181]

So I was learning about which entity to form on my own and decided to make an S Corp due to the tax benefits. But I didn’t consult a tax advisor and learned about the double taxation once tax time came around. So In trying to get ahead, I ended up shooting myself in the foot. Now I’m kind of stuck with the s Corp.

[@NaviMarajCPA]

@nizzyneyrogers did you form a C Corporation and then make the S election or did you form an LLC and then make the S election?

[@nizzyneyrogers1181]

So the first accountant I met told me that he made me an S Corp from the jump. When I went to another accounting firm, they told me that it was actually a C Corp and had to fill out a 2553 to become an S Corp. After I did that was when I learned about the double taxation in NYC. I am an occupational therapist and all everyone ever talks about is starting an S Corp to save money. This has ended up being one of the most costly decisions I have ever made. I feel like I paid more in taxes than someone who was a W2 employee. Sucky situation altogether that I am stuck with.

[@NaviMarajCPA]

@@nizzyneyrogers1181 I feel your pain. I would inquire with a firm that is experienced with the NYC tax and that can help you get rid of the C Corp/S Corp and start over. Thanks for sharing all the details.

[@gregorysymula4127]

Vermont??? 8.5% + legal and accounting fees??? No dice huh. :0