Businesses operating in North Carolina must navigate a complex landscape of tax obligations to ensure compliance and financial stability. These taxes include corporate income tax, franchise tax, sales and use tax, withholding tax, and personal property tax. Each type of tax comes with specific filing requirements, payment options, and potential exemptions that can significantly impact a business’s financial health.
North Carolina Corporate Income Tax
The Corporate Income Tax in North Carolina is levied on the net income of corporations doing business within the state. North Carolina boasts one of the lowest corporate income tax rates in the country, currently set at 2.5%. To file this tax, corporations must use Form CD-405, the North Carolina Corporate Income Tax Return, which can be filed electronically through the North Carolina Department of Revenue’s eFile system or by mail.
Businesses can pay the Corporate Income Tax online via the eFile system using electronic funds transfer (EFT) or a credit card. Payments can also be made in person at North Carolina Department of Revenue offices or by mailing a check or money order with the completed tax return form.
Several exemptions and credits can reduce the corporate income tax burden. North Carolina offers credits for job creation, investment in renewable energy, and research and development activities. Corporate income tax returns are generally due by the 15th day of the fourth month after the end of the corporation’s tax year, typically April 15 for calendar-year taxpayers.
North Carolina Franchise Tax
The Franchise Tax in North Carolina is assessed on the greater of a company’s net worth or the value of its real and tangible personal property in the state. This tax is intended to ensure that all corporations contribute to the cost of maintaining state infrastructure and services. To file the Franchise Tax, businesses use Form CD-401S, which can be submitted electronically or by mail.
Payments for Franchise Tax can be made online through the North Carolina Department of Revenue’s eFile system, in person at designated offices, or by mailing a check or money order.
Exemptions for the Franchise Tax may apply to certain types of businesses and specific asset classes. Due dates for Franchise Tax payments are the same as for corporate income tax, typically the 15th day of the fourth month after the end of the corporation’s tax year.
North Carolina Sales and Use Tax
North Carolina imposes a Sales and Use Tax on the sale of tangible personal property and certain services. The statewide sales tax rate is 4.75%, with additional local taxes that can increase the total rate to 7.5% or higher. To file this tax, businesses use Form E-500, Sales and Use Tax Return, which can be filed online through the North Carolina Department of Revenue’s eFile system or mailed to the appropriate address.
Payments for Sales and Use Tax can be made online using EFT or credit cards through the eFile system. Businesses also have the option to make payments in person at Department of Revenue offices or by mailing a check or money order with the completed Form E-500.
Several exemptions exist for Sales and Use Tax in North Carolina. For example, sales of certain agricultural products, prescription medications, and sales to nonprofit organizations are exempt. Monthly sales tax returns are due by the 20th of the following month, and quarterly returns are due by the 20th of the month following the end of the quarter.
North Carolina Withholding Tax
Employers in North Carolina are required to withhold state income tax from their employees’ wages and remit it to the state. To file this tax, employers use Form NC-5, Withholding Return, which can be filed electronically through the North Carolina Department of Revenue’s eFile system or by mail.
Payments for Withholding Tax can be made online using EFT or credit cards through the eFile system. Additionally, employers can make payments in person at Department of Revenue offices or by mailing a check or money order with Form NC-5.
There are no specific exemptions for Withholding Tax, but employers must withhold the correct amount of tax from employee wages. The due dates for withholding tax returns can be monthly or quarterly, depending on the amount withheld. Monthly returns are due by the 15th of the following month, while quarterly returns are due by the last day of the month following the end of the quarter.
North Carolina Personal Property Tax
The Personal Property Tax in North Carolina is levied on the value of business-owned personal property such as equipment and inventory. To file this tax, businesses must use the appropriate county-specific forms provided by the local tax assessor’s office.
Payments for Personal Property Tax are typically made directly to the county tax office. Businesses can pay online, in person at the local tax office, or by mailing a check or money order.
Certain exemptions apply to Personal Property Tax, such as property used for manufacturing and inventory held for resale. Due dates for personal property tax returns and payments vary by county but are generally due by January 31 each year.