Doing business in Connecticut can be a challenge, especially with the recent tax law revisions at the state and federal levels. Sole proprietorships and single-member limited liability companies that are not considered for federal income tax purposes are not subject to PE tax. However, what makes income qualify and to what extent depends on a number of factors, including your line of business and how much you earn. In some cases, LLC owners choose to have their company treated as a corporation for tax purposes.
As part of the Tax Cuts and Jobs Act (TCJA), Congress included a deduction on taxable income for transfer business owners, having reduced the tax rate of C corporations to 21 percent (from rates as high as 35 percent). Connecticut's new budget bill makes many changes to Connecticut's tax rules for businesses and individual taxpayers. In addition to lowering the threshold of the economic nexus and extending it to sales of services, the bill removes the requirement for such retailers to regularly or systematically request sales in Connecticut. Available incentives include business and personal income tax credits and deductions, sales and use tax exemptions, and a property tax assessment freeze.
These can help you and your company comply with the new tax law and advise you on how to help minimize your tax liability at the state or federal level. You can pay tax online on the DRS website or on paper using Form OP-424, Business Entity Tax Return. Connecticut tax paid by the transfer entity would be offered as a refundable credit to members at a rate of 93.01%. Attorney John Bowser has been helping businesses, families and individuals create better lives for themselves and the communities surrounding the greater Danbury, Connecticut area for nearly 50 years.
He has been elected to the House of Delegates of the Connecticut Bar Association to represent District 4, including the cities of Bethel, Brookfield, Danbury, Georgetown, Monroe, Newtown, New Fairfield, Redding, Ridgefield and Sherman.