What is a Franchise Tax?
A franchise tax is imposed by the state in which a franchise is run. If you are considering becoming a franchisee then you should research franchise taxes for your state to get a good picture of your financial outlay prior to purchasing a franchise. For a minimal all-inclusive franchise fee you can become a franchisee of WSI, the white collar franchise that has been ranked at the top of the Internet and technology services franchise industry for seven consecutive years.
A franchise tax is a type of state tax that is obligatory of some business owners. It is required to be paid by certain types of corporations by its governing state’s tax board. Franchise tax amounts vary according to the size of a business, but other elements of a company can be used to figure out the tax fee as well. Net worth and net income both attribute to a corporation’s franchise tax. Profit, income, assets, and outstanding shares may also determine a business’s fee. A state may also use a combination of any of those factors to decide a company’s tax fee. Of course, the tax amount varies and it is determined differently from state to state. In some states the franchise tax is a flat fee. The basic idea behind the franchise tax is that it is a fee for the privilege of conducting business in a certain state. It actually gives the corporation the legal right to operate in a certain area. Such a fee is usually paid annually, and it can be paid during the normal tax time. Some corpor
How do we define: franchise tax? Franchise Tax is a tax on the right and privilege of carrying on business in the corporate or LLC form in a state. The value of the franchise tax may be measured by amount of earnings, total value of capital or stock, or by amount of business done. Every new business owner must learn about incorporating their company. Learning how to incorporate your company is critical to starting up and protecting your future.
Who has to pay? A franchise tax is a State tax imposed on LLC s and Corporations for doing business in that State. Limited Partnerships and General Partnerships do not have to pay this tax. LLC’s, Corporations and LLC Partnerships have to file and pay franchise tax if their gross receipts are more than $150,000. In the state of Texas, if your gross receipts are less than $150,000, you do not have to pay any franchise tax, but you still have to file the report. At Lisa P. Gonzalez, CPA, PLLC, we will show you how to avoid paying any franchise tax, ever, just by reducing your net income to zero by year end. Ask How!
