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Challenges with Remote Working

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Beginner’s Guide to Ohio State Corporate Tax Information

Taxes, one of the inevitabilities of life, are important to understand before doing business in any state. The rules change from state to state, but a basic knowledge of your tax code can go a long way.

In Ohio, corporate tax procedures are uncommon. Ohio is one of just four states that does not charge any type of corporate income tax. While the state does collect bracket-based personal income taxes, it does not do the same with corporations.

Nor does it have a franchise tax, a common tax set in states for the privilege of doing business in that state. Beginning in 2013, Ohio phased out franchise taxing and focused exclusively on taxing corporations via commercial activity tax (CAT).

The CAT’s Out of the Bag

A CAT is Ohio’s main form of corporate taxation. If you do business in Ohio, you will generally be covered by CAT unless you receive personal income from your business, which is handled through your personal income tax return.

CAT is based on an organization’s gross receipts. The tax rates for varying amounts of gross receipts are as follows (via Nolo.com):

  • less than $150,000 = no tax
  • from $150,000 to $1 million = $150 tax
  • over $1 million up to $2 million = $800 tax
  • over $2 million up to $4 million = $2100 tax; and
  • over $4 million = $2600 base tax + .26% of gross receipts.

There are also rules to follow regarding how often and when your business must pay your CAT. Some businesses pay quarterly while others pay yearly, depending on the amount of the gross receipts.

Aside from corporate taxation, Ohio has favorable tax rates in other area. According to TaxFoundation.org, Ohio is ranked #8 of 50 for unemployment insurance tax rates. It is also ranked #11 for property tax rates. Ohio’s average sales tax is 7.14%.

Considering setting up shop in Ohio? We have the information you need! Read on to learn more about what the Buckeye State can offer you.

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Sources

https://statetaxindex.org/

https://taxfoundation.org/state-corporate-income-tax-rates-and-brackets-2016/

https://www.nolo.com/legal-encyclopedia/ohio-business-income-tax.html

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