Depending on your business’s location, you may need to pay or remit certain state-specific taxes. One type of state tax your business should be aware of is gross receipts tax (GRT). Read on to learn about gross receipts tax and whether or not you’re responsible for remitting it to your state.
What is a gross receipts tax?
What is gross receipts tax, anyways? Before we can get to that question, you have to know what gross receipts are.
Gross receipts include your business’s total revenue without deductions like operating expenses and discounts. Basically, gross receipts are the total amount of revenue your business collects during the year.
Gross receipts tax is a tax some businesses must pay on their gross receipts. Unlike sales tax, gross receipts tax is not paid by the consumer (e.g., at the point of sale). Some states levy gross receipts tax instead of corporate income tax. However, some states have both types of taxes. Like corporate income tax, gross receipts tax generally varies from state to state. If your state imposes a gross receipts tax, you are responsible for paying a GRT rate (e.g., 0.23%) on your business’s revenue.
In short, your GRT liability typically depends on:
Your state Type of business How much revenue your company earns States with gross receipts tax
At this point, you’re probably wondering, What are the states with gross receipts tax? Glad you asked…
Unlike some other types of taxes (e.g., sales tax), not every state requires businesses to pay GRT. In fact, only seven states impose it. The states that levy gross receipts tax include:
Delaware Nevada Ohio Oregon Tennessee Texas Washington
Again, gross receipts tax rates and rules can vary depending on the state. To get the scoop on what each of the states require, keep reading.
According to Delaware’s Division of Revenue, any company that is “engaged in business” in the state must have a business license and pay GRT. You must pay the tax if you sell goods or provide services in Delaware. Depending on the business’s activity, gross receipts tax rates can range from 0.0945% to 0.7468%.
If your business does not have a physical presence within the state (e.g., sends orders to customers in Delaware via mail), you are not responsible for paying GRT.
Delaware gross receipts tax is due either monthly or quarterly, depending on your lookback period. If you’re a monthly filer, your GRT is due on or before the 20th day of each month. Quarterly filers must remit their GRT to the state on or before the last day of the first month following the close of the quarter.
You can file the Delaware Gross Receipts Tax form online. Or, you can print and mail a paper form to the state. Log into your Delaware account online to access and print your paper form.
The Nevada Department of Taxation states that all businesses with gross revenue exceeding $4,000,000 in the taxable year are required to pay Nevada gross receipts tax, or Commerce Tax. Certain entities, such as nonprofits, are exempt from the tax. Check out Nevada’s website for a complete list of exempt entities.
Your Nevada GRT rate depends on what business category your company falls under (NAICS code). Most businesses have a rate between 0.05% and 0.3%.Continue reading