Income and Franchise Tax

Most states impose a net income tax on companies that do business within their borders. Many begin with federal taxable income, but most modify that amount with various income and deduction adjustments. For example, in the interest of attracting more jobs, many states have enacted special investment and employment tax credits and deductions. It's important to be aware of these adjustments and how they might affect your business.

For the multi-state organization, there is an added concern of how much income is taxable by each jurisdiction. Each state has a formula to determine how income is to be apportioned among the states in which you do business. In some situations, such as rental properties, income is easy to source to the state where the property is located. However, in most business situations, income cannot be so directly or easily sourced.

Michael Silver & Company CPAs dedicates time to becoming familiar with your operations in order to identify all of the state tax credits that you may be entitled to. Our State and Local Tax team assists by navigating the maze of income adjustments, sourcing, and apportionment rules to ensure you pay only the state taxes you are liable for. Taking into consideration the states where you operate, we determine the proper and applicable sourcing and apportionment methods applicable to your business and ensure that they are properly applied.

Income Taxes for Pass-Through Entities

A wide range of state tax types are applicable to S Corporations and Partnerships, including income, franchise/net worth, gross receipts, and other taxes. An important and often overlooked issue is the withholding of state income tax on nonresident owners. Failure to withhold from nonresidents often results in severe penalties.

Tax planning and compliance for pass-through entities has never been more challenging, in light of various alternatives, such as filing composite tax returns or even electing to be taxed at the entity rather than pass-through status. Considering the maze of options, our State and Local Tax team can evaluate the implications of each and determine which provides the most cost-effective approach.