Franchise Tax in the US: What Small Biz Owners Need to Know 💼💸
Running a business isn’t just about sales — taxes matter too! One tax that often confuses folks is franchise tax. Unlike income tax, it’s a fee some states charge just for doing business there.
What’s Franchise Tax? 🤔
It’s a state fee, not based on profit.
Mostly applies to corporations & LLCs.
Each state has different rules — flat fee, revenue-based, or net worth-based.
Who Pays? 🧾
Corporations (C corp or S corp)
LLCs
Limited Partnerships (LP/LLP)
Probably not you if you’re a sole proprietor or general partnership (usually). But check your state’s rules!
Some State Examples 📍
CA: Minimum $800/year or 1.5% of net income for S corps
TX: Only if revenue > $2.47M, rates from 0.375%-0.75%
NY: Based on income, capital & business activity
DE: $175 minimum, up to $250k depending on biz size
How to Stay Compliant ✔️
Know your state’s rules & deadlines
Understand your biz structure
Pay on time to avoid penalties
Work with corporate tax pros to make it easier
Franchise tax isn’t one to ignore if you run an LLC or corp. Stay informed, stay on top of deadlines, and keep your business in good standing!
🔗 Learn more at Counto.
Franchise tax in the US is a state-imposed fee on businesses for the privilege of operating within certain states. Learn which businesses mu