This year’s tax deadline is fast approaching, and now is the time to start getting your books in order. Minnesota has long been working on revising its tax laws in order to make the state more small-business friendly, and there are some new rules this year. Before filling out your tax forms this year, be aware of these guidelines, which may affect your business.
You May Be Required To Pay A Minimum Fee
In Minnesota, a business’ minimum tax fee is determined by the combined value of property, payroll, and sales taxes, but it doesn’t apply until the sum of these items equals $500,000 or more. This fee is in addition to income taxes. Nolo.com, an online legal encyclopedia states, “Minnesota’s “minimum fee” tax applies to traditional corporations, S corporations, LLCs, and partnerships. The minimum fee is based on the combined value of a business’s property, payroll, and sales.”
Native American Owned Businesses Should Double Check On Federal Taxes
Minneapolis is home to many Native American Owned businesses, and some of these companies may be exempt from certain taxes. However, some of these exemptions may not apply. According to the University of Minnesota’s Agricultural Business Management website, “Absence of language granting federal tax exclusion in the treaty or allotment agreement indicates that all income is subject to federal taxation. No tribes in Minnesota have a federal exemption stated in a treaty or allotment agreement, but the State of Minnesota does recognize a state income tax exemption for Native Americans.” Earnings generated on the reservation may not be subject to income taxes.
Your Business Structure Determines How You Pay Taxes
One of the most important decisions you make when establishing a business is how it is organized. Each structure has different implications for taxes, personal financial liability and more. Whether you’re an S Corporation, a Sole Proprietor, an LLC or another entity determines which forms to fill out, how your taxes are calculated and much more. If you have any questions, talk to a tax attorney or a CPA.
Your Tax Rate May Be Different In 2017
One method by which Minnesota has aimed to be more business friendly is by aligning its business tax rates with those of the federal government, so your rate may be different. According to the Corporate tax information posted on the Minnesota Department of Revenue website, “A bill signed into law on January 13, 2017, conforms Minnesota law to federal law when determining federal taxable income for tax year 2016.” Your CPA or tax accountant will be able to help you conclude whether or not you are paying at the correct rate.
Minnesota’s tax codes for businesses are continuing to be refined, and the way you filled out all of your forms last year may not be correct for your 2016 return. If you need assistance with your taxes, call a tax professional, or schedule an appointment with the Minneapolis branch of the Small Business Association.
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For more tips and inspiration for small business owners,
visit CBS Small Business Pulse Minnesota.