Tax Requirements for Nevada Businesses
As a Nevada business owner, you’ll need to know the answer to this question: What are your tax requirements? Here are some helpful Nevada business tax facts and general business tax information:
- States typically tax income derived from C corporations, as well as S corps, LLCs, limited partnerships, and other types of “pass-through” taxable entities.
- Corporate and business income tax rates will vary from state to state. The typical state corporate income tax rate ranges from 4% in lower tax jurisdictions to as much as 10% in higher tax states.
- Personal income tax rates always vary wildly, with several states having no tax on personal income, while others (New York, California) having top state income tax brackets well above 10%.
- Nevada is one of six states (the others being Ohio, Texas, Washington, Wyoming, and South Dakota) is currently do not tax corporate income.
- Nevada is also one of the few states (the others being Alaska, Florida, Texas, Wyoming, South Dakota, and Washington) that do not have a personal income tax.
Those last two bullet points may make Nevada sound like a state tax “haven.” However, businesses in the Silver State are still taxed on their business income through another means of taxation. Nevada is similar to Texas, Washington and Ohio in that businesses are taxed on their gross receipts.
Unlike the “franchise taxes” charged by Texas, Washington, and Ohio, Nevada businesses are taxed based on a percentage of their business payroll. This tax is known as the modified business tax (or MBT).
What is The Nevada Modified Business Tax (Nevada MBT)?
Businesses that meet the minimum number of required employees must report their aggregate gross wages paid (or payroll) to Nevada’s Employment Security Division.
Any business that files with the Nevada ESD must pay the Nevada modified business tax. Almost all Nevada businesses end up being subject to Nevada’s MBT. Unlike other state’s franchises taxes, the Nevada modified business tax functions more like the employer’s share of payroll taxes.
The Nevada MBT is collected quarterly, with the total tax amount due on the last day of the following month after the end of a quarter. For example, Nevada MBT due on the first quarter of the calendar year (January 1-March 31) would be due on April 30.
You cannot escape the Nevada MBT: Any employer who registers with Nevada’s Employment Security Division is automatically registered to pay the modified business tax.
How is the Nevada Modified Business Tax Calculated?
Nevada defines gross wages as the total amount of wages paid to an employee. This amount includes any tips and employee earned as well.
What is the Nevada Modified Business Tax Rate?
The current modified business tax rate is 1.475% of quarterly payroll exceeding $50,000. This means that businesses that have a quarterly payroll of less than $50,000/quarter or $200,000/year are exempt from the tax. As a result, most small businesses just starting out may end up not being subject to the Nevada MBT.
Nevada Commerce Tax
Nevada’s Commerce Tax is primary a concern for mid-sized to larger enterprises. You are only subject to the tax on business revenues exceeding $4 million.
The commerce tax is essentially a franchise tax like those charged by Texas and Washington. Your rate is calculated based on your industry and the amount of gross receipts. The percentage rates charged by the Nevada Commerce tax will vary from .051% for low margin businesses to as much as .331% for higher margin industries.
Other Ways a Nevada Business Can Be Taxed
If you operate in Nevada’s gaming industry, you will subject to another major means of business taxation: the gaming revenue tax.
The State of Nevada accesses a tax on restricted and non-restricted gaming licensees based upon a percentage of their total gaming revenue for the year. These rates range from as low as 3.5% to as high as 6.75% of revenues generated from slot machines, video poker, table games, card games, and other types of gaming activities.
Licensees may also be subject to annual licensing fees for the privilege of operating these games.
Nexus in Nevada
An important factor to consider in state taxation is nexus. Nexus is the legal term for the level of physical presence your business has in a state that is material enough to consider you subject to state taxation.
It is important to seek qualified legal and accounting advice to see if your business has established nexus in the state.
Stay Compliant With Your Nevada Business Tax Requirements
It’s not the most exciting part of being a business owner in Nevada, but staying compliant with your Nevada business tax requirements will help minimize distractions that could keep you from growing your business. Keeping up with your tax obligations will give you the ability to focus on what you need to do to succeed!
For financing that can help your business get started, grow or expand, contact us here at 5 Star Funding Group.