Paying Louisiana small business taxes is an important part of keeping your business legally compliant. However, understanding business taxes in Louisiana can be confusing. Sometimes, even the most experienced business owners struggle to understand their Louisiana business tax rate. In fact, tax rates can differ depending on how much money your company makes and what form of business entity you have. To help, we’ve put together this short guide on what kinds of taxes you might need to pay as a Louisiana business owner, how to file them, and how we can help make the process easier.
If you’re looking for more comprehensive compliance help, our Worry-Free Compliance Service can handle annual reports and other required filings for you, all while keeping your business records organized.
If you’re looking for information about federal taxes, head over to our page on federal taxes for small businesses to learn more.
Step 1: Establish your Louisiana business’s corporate income tax obligations
When your company makes money in a state, the tax man usually wants a piece of the action. Louisiana is no exception. The Louisiana Department of Revenue charges businesses income and excises taxes based upon the type of business entity. Taxation for corporations in most states is at the state’s corporate income tax rate. However, if you operate your business as a limited liability company (LLC), partnership, or sole proprietorship, these are all considered pass-through entities. This means the tax “passes through” to the owners, who pay taxes based on the state’s personal income tax rate. Louisiana is unusual because the Louisiana business tax rate for S corporations is the same as for regular corporations. In most other states, S corporations are treated as pass-through entities.
Louisiana charges corporations a marginal tax as a percentage of business income. For instance, a Louisiana corporation might pay Louisiana small business taxes like this:
- The company’s first $25,000 of taxable net income taxed is taxed at 4%
- The next $25,000 of taxable net income is taxed at 5%
- The following $50,000 of taxable net income is taxed at 6%
- The next $100,000 of taxable net income is taxed at 7%
- Any net taxable income over $200,000 is taxed at 8%
Again, Louisiana is unique because the Louisiana business tax rate for S corporations is the same as for regular corporations.
An owner’s earnings from pass-through entities like LLCs and partnerships are taxed at your personal income tax rate in Louisiana. If you’re struggling to figure out what your Louisiana business tax rate is for your LLC or partnership, you need only figure out what your personal income tax rate is.
Keeping track of when your small business taxes are due can be difficult, especially when your mind is on other aspects of your business. To help you understand when your Louisiana small business taxes are due, the Louisiana Department of Revenue and the U.S. Small Business Administration offer helpful resources for small business owners. This is especially helpful because your personal taxes, business taxes, and/or quarterly estimates may be due at different times during the year.
The Louisiana Department of Revenue can also be a great resource if you have to file a “zero return.” This document typically shows that you’re a Louisiana company but your company didn’t make any money in the state during the taxable time period. Confirm all the details about filing a zero return with the Louisiana Department of Revenue if you have questions.
Step 2: Determine your Louisiana business’s employment taxes
If your Louisiana business employs workers, you may have employment tax obligations. Those types of Louisiana small business taxes can include things commonly referred to as “payroll taxes.” As a Louisiana employer, you need to withhold taxes from your employees’ paychecks.
Each employee’s payroll withholding tax situation will be different. However, as the employer, you’ll still need to keep track and withhold the required taxes. You can learn more about your obligations from the Louisiana Department of Revenue.
Step 3: Establish your Louisiana business’s additional state tax obligations
Some businesses will have to pay more Louisiana small business taxes than others. For instance, retail businesses and folks who sell goods and services will have to pay sales tax. While Louisiana is very business-friendly, there are a few additional taxes of which business owners need to be aware.
Louisiana currently charges a 4.45% sales tax. Business owners need to pass this through to the state. Business owners will need to apply for a sales tax certificate, charge customers tax, and file the appropriate paperwork with the Department of Revenue each month. Sales tax returns and payments are due on or before the 20th of the month following the close of the calendar month or calendar quarter of the sales tax reporting period.
Louisiana charges unemployment insurance for employees in the form of Louisiana small business taxes. Check in with the Louisiana Workforce Commission to find out what your obligations are and how to file your unemployment taxes.
Louisiana’s franchise tax is basically a tax on a company’s net worth for the privilege of doing business in Louisiana. The Louisiana business tax rate for franchise tax is basically a marginal rate with only two brackets. The fees and brackets are as follows:
- Franchise tax is charged at a rate of $1.50 per $1,000 or fraction thereof of capital deployed within the state of Louisiana up to a total of $300,000
- Franchise tax is charged at a rate of $3.00 for each $1,000 or fraction thereof deployed within the state of Louisiana in excess of $300,000
This tax applies to both corporations and S corporations, making Louisiana small business taxes unique from those in other states that treat S corporations as pass-through entities.
Step 4: Prepare to file and pay your Louisiana business taxes
You’ll file your Louisiana small business taxes with the Louisiana Department of Revenue. The Department of Revenue has an e-Services portal where you can file some documents and payments online. However, certain filings and services still need to be completed in person or by mail.
You’ll need to get your records in order before filing your tax return. Some records you may need to file your business taxes in Louisiana include:
- Your social security number
- Business address and company public information
- Your Employer Identification Number (EIN)
- Any invoices and sales records from the last year
- Your business’s expense records
- Any relevant receipts
One way we can help you keep track of business records is our ZenBusiness Money App. This application organizes your finances by creating and storing invoices, paying vendors, and managing receipts.
Not sure how to stay compliant? Learn more about legal compliance for small business owners.
Do I need an accountant?
If the thought of dealing with your Louisiana small business taxes has got you down, don’t worry. Most Louisiana small businesses need and use professional accounting help. You want and need your taxes done correctly, and having a pro doing them is important. The penalties for making erroneous calculations in Louisiana small business tax filings can be just as severe as the ones for not filing at all. Hiring an accountant can take a huge burden off your plate.
To help you choose a qualified professional to assist you with how to file small business taxes, the Internal Revenue Service (IRS) has posted a guide to understanding tax preparer qualifications on its website.
How we can help
Our business is helping you with your business! Our innovative ZenBusiness Money App can help you manage invoices and send payments, not only keeping you on track for tax time, but making your regular reporting a breeze.
Disclaimer: The content on this page is for information purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
- How much can a Louisiana small business make before paying taxes?
Most Louisiana businesses will need to file some form of tax return. However, not all businesses will owe tax. Check with your accountant or tax preparer to best understand your situation, deductions, and credits.
- What percentage does a Louisiana small business pay in taxes?
The percentage of your income paid in tax will depend upon your business entity type and level of income. The Louisiana Department of Revenue is a great resource for information on tax rates.
- How does a Louisiana small business pay taxes?
A Louisiana small business can pay some taxes through the Department of Revenue e-Service portal. Other taxes need to be paid by mail or to individual agencies.
- Do I have to file taxes for my small business in Louisiana?
You will likely have to file Louisiana small business taxes. It will depend upon your form of business entity and your level of business income in Louisiana.