If you’re a business owner who owns a building, land, or property, you are probably familiar with business property taxes. But, you may be responsible for paying business personal property taxes in addition to your other taxes. Read on to learn all about business personal property tax and whether you’re responsible for paying it.
What are business personal property taxes?
When you think of property taxes, you likely picture buildings, land, and real estate your business owns. But, property taxes aren’t limited to just buildings. They also cover other items owned by your company that you use for business.
Business personal property, also known as tangible personal property, are items a business uses and owns for day-to-day operations. Business tangible personal property can also be goods businesses take with them when moving locations.
Some examples of business personal property include:
Furniture (e.g., chairs) Computers Machinery Supplies Tools Printers Telephones Filing cabinets Paper shredders
Keep in mind that this list is not all-inclusive. There could be other property your business owns that you’re required to pay business personal property tax on. Because these items are used for business purposes and operations, some localities require business owners to pay property tax on them, along with taxes for buildings and real estate.
So … how do you know what is taxable when it comes to business personal property? There is no comprehensive list for which items are taxed because business personal property tax varies from state to state (covered more later). And, some specific types of business personal property, like supplies, are exempt from taxation in jurisdictions.
Who needs to pay business personal property taxes?
Business personal property taxes vary depending on your locality. Your local tax authority may require you to pay an annual personal property tax in addition to your business property taxes. Or, they may lump your business personal property and regular business property taxes together. And as mentioned, the items you have to pay tax on may also vary depending on your jurisdiction.
Business personal property tax by state
Some states tax business personal property, while others do not. As a business owner, it’s your responsibility to know whether or not your state/locality taxes business personal property.
Twelve states do not tax business personal property:
Delaware Hawaii Illinois Iowa Minnesota New Hampshire New Jersey New York North Dakota Ohio Pennsylvania South Dakota
Some states may have more complex personal property tax processes than others. There are a few states that tax both tangible assets (physical items) and intangible assets (e.g., stocks and bonds). Of the 38 states that do have some form of tax on business personal property, most do not tax intangible property.
Check with your state to find out state-specific personal property tax rules and how to stay compliant.
Business personal property tax form
Some localities incorporate business personal property tax into your business property taxes. If you live in a locality that combines business property and personal property taxes, you may need to complete a business personal property tax form annually.
Depending on your locality, you may be required to submit a form annually regardless of whether your taxes are combined with your other business property taxes. If your locality requires your business to fill out a form, you likely need to include business detailsContinue reading