8:14 AM
Comparing Delaware, Florida, Montana, Nevada, and Wyoming For Best State For Business Tax
The states of Delaware, Florida, Montana, Nevada, and Wyoming all offer great incentives for businesses that desire to operate without taxes.
Corporate Income Tax:
Nevada and Wyoming lead the pack with no outright corporate income tax nor personal income tax for that matter. While Florida and Montana only tax C-corporations, Florida actually has a tax reduction program for C-corporations and as well no personal income tax. Finally, Delaware does not tax foreign corporations or llc's.
- Delaware- No Corporate Income Tax (Foreign Corporation/ Llc Only)
- Florida- No Corporate Income Tax for S-Corporations and Program for Reduction of Taxes for C-Corporations
- Montana- No Corporate Income Tax for S-Corporations
- Nevada- No Corporate Tax
- Wyoming- No Corporate Tax
Initial Business Fees and Annual Fees
Montana by far has the lowest annual fees while Nevada is close behind. If you are a corporation watch out for Delaware and Nevada fees either on number of shares of stock whether by way of formation or ongoing annual fee.
- Delaware- $89 for Initial Fee for Corporations and LLC's along with a Fee Based on Stock Shares Issued and then an Annual Fee of $300 Plus Franchise Tax Based on Outstanding Shares of Stock
- Florida- $70 for Initial Filing for Corporations and $125 for LLC's and then $150 for Corporations and $138.75 for LLC's Annually
- Montana- $70 for Corporations and LLC's and then $20 Annually
- Nevada- $75- $375 for Corporations for Initial Formation Based on Shares of Stock up to 1,000,000 and $150 for LLC's and then $350 Annually
- Wyoming- $100 for Corporations and LLC's for Initial Formation and then $50 Annually (Can be Slightly Higher Based on a Revenue Calculation)
Franchise Tax (On Shares of Stock):
Delaware is the only state from amongst these five to maintain a true franchise tax. Florida does carry a franchise tax for C-corporations. Delaware- Yes (This Can Get Very Expensive and Should Be Calculated BEFORE Incorporating)
- Florida- Yes on C-Corporations
- Montana- No Franchise Tax
- Nevada- No Franchise Tax
- Wyoming- No Franchise Tax
Sales Tax
Montana is definitely the preferred state in the sales tax grouping as it carries no excise, inventory, or sales tax for businesses. Nevada and Wyoming fund their budgets with sales tax first and foremost so those two states carry high rates as well. And of course the rest have different variations for funding their budgets as listed and itemized below.
- Delaware- No Sales Tax (Gross receipts tax for businesses do apply)
- Florida- No Sales or Use Tax (All Items Produced for Export Outside of Florida)
- Montana- No Excise, Inventory, or Sales Tax
- Nevada- No Excise or Inventory Tax
- Wyoming- No Inventory or Gross Receipts Tax
Property Tax
Florida is the head of the class with respect to property taxes. Delaware does not have a true tax at the state level and at the county level and aggressive abatement program much like Florida's c-corporation income tax does exists. Montana, Nevada, and Wyoming do maintain property taxes albeit at low percentages.
- Delaware- No Property Tax (County tax does apply while some relief programs do exist)
- Florida- No Property Tax
- Montana- Yes
- Nevada- Yes
- Wyoming- Yes
**Remember each and every Corporation and LLC actually exists and resides within their bylaws or operating agreement which is the heart and soul of a corporation or llc. Without good, solid by-laws or operating agreement, you really do not have a corporation or llc.
***This blog is for educational purposes only and as such you are advised to seek out and consult with your legal and tax advisors prior to engaging in any decision making affecting your business.
