New Hampshire Business Tax
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If a state has no personal income tax, but does have a corporate tax, how would that end up working out for tax liability? (All corporate entities are taxed, regardless of structure)
For example, if you produce 500k, pay yourself 35% (175k) and then have profit through your corp of 75k (assuming 50% overhead), would you then only be responsible for the 75k in corporate taxes? Does the 35% strictly count as personal income?
Just the profits of the business, not your salary.
In a nut shell, most states allow an S-Corporation's income to pass through to the individual without being taxed at the corporate level, take Florida for example. However New Hampshire is a bit different in that it doesn't matter that you have an S-Corporation structure, it will still tax you at the corporate level.
So what does this mean? It means that you definitely want to pay attention to your dental practice taxable income throughout the year so that you don't get hit with double taxation (Federal and State). There are many ways to accomplish this but all of them are easier to implement if you give yourself enough time to execute. Some ideas include increasing retirement contributions, or purchasing software or equipment, perhaps traveling for CE, or hosting a staff function or simply giving yourself a bonus at the end of the year.
Hope that helps, and please pay EXTRA attention to your tax basis books throughout the year.
Trusted Business Advisor
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