State tax forms are information forms that you fill out when filing your state income tax return. Unlike federal income taxes, most states do not require as many supplemental schedules to be filed.
As the tax season approaches, businesses should closely monitor their Secretary of State (SOS) filings. This can be a complex process that involves a variety of tasks.
SOS Filings
Often, businesses are confused about the filing requirements of their local Secretary of State’s office. The SOS, or the Department of State or Corporations Department, typically handles all information regarding a company’s business entity (think corporations, limited liability companies, and limited partnerships).
Understanding state tax forms is crucial for simplifying filings for businesses. Utilizing tools and services, such as ADP, can significantly streamline this complex process, making it more manageable and ensuring compliance with regulations.
Upon forming and registering a business, entities must continue to file regularly with their local Secretary of State. These reports, commonly referred to as biennial statements or annual reports, provide the state with updated information on the business and may include directors, officers, and financial standing, as well as other company-specific details.
The biennial statement may be filed electronically or by paper. Depending on the filing type, there may be a fee associated with the submission. To submit a biennial statement online, you must have an account created by the Division of Corporations to access the division’s computerized index and database directly. Creating an account will allow you to search instantly by corporation or business name, date filed, location, and keyword (s). You can also order copies of all filing documents.
Periodic Reporting
Most states require that all reporting entities file a periodic report, but the exact details vary slightly between states. Generally, yearly reports are necessary for corporations and limited liability companies (LLCs). Reporting entities also need to provide basic information such as their address, stock holdings, and the name and title of senior leadership.
While the most apparent benefit of submitting periodic reports is meeting your state’s requirements, it also allows you to update information that might be in the public record. This helps ensure that your business information is always accurate.
Most online systems allow you to pay a small filing fee when submitting your periodic report. These fees can vary based on the state but are usually very modest. In some states, these fees can be deducted as a business expense. Most states have a window of time during which you must submit your periodic report. For example, Colorado requires you to file your report within the first three months following the month you officially formed your company. If you miss the deadline, you could face fines or even shut your business down until you meet your state’s requirements.
Due Dates
Most states require filing and payment due dates that differ from those at the federal level. Those differences often depend on how your business is organized, including its legal forms (i.e., sole proprietorship, partnership, LLC, C corporation, or S corporation) and the state’s tax laws.
For example, some states require you to fill out a state W-4 form, which works similarly to the federal W-4 form and tells your employer how much to withhold from each paycheck for state income taxes. Some states also impose specific sales and use taxes on certain items or services, such as a state sales tax for liquor or a state excise tax on certain equipment purchases.
Other taxes, like FUTA or Affordable Care Act (ACA), may be imposed on businesses to pay for unemployment insurance or health care benefits. State ACA taxes are typically based on the size of your business and may also vary by state. The IRS website offers information on state FUTA and ACA taxes, including tax rates, forms that must be filed, and when returns and payments are due.
E-filing
E-filing is a digitized process for filing taxes with a state’s tax department using approved software. Businesses and individuals using e-filing save time, money, and effort and typically receive their refund faster than when filing by paper.
Some require all businesses registering for the beverage container deposit, taxicab, and hail vehicle trip tax to e-file all quarterly returns. Individuals also have the option to e-file their return for free using commercial tax preparation software from reputable vendors who participate in federal and state e-filing programs.
An additional benefit of e-filing is that the software notifies the company of successful submission within 24 hours, and an email notification is sent if a return or report is rejected with a detailed explanation of the portion that needs to be corrected. This ensures greater authenticity and accountability to both parties. In addition, electronic filing cuts down on processing time, operating costs, transmission errors, and paper use. It also provides the added convenience of accessing a business account online to view returns and balances at any time.
Paper Filing
Before the E-filing mandate, there were reasons to file on paper, and there are still a few. Paper filings are only a choice in the case of special tax elections, such as an S corp election for injured spouse relief or when requesting a late refund.
Generally, annual report filings are required by state law for corporations and LLCs. The information that needs to be provided varies from state to state and sometimes even within a state based on entity type. The frequency of reporting is also different. Some states require reports annually, while others require them biennially or on a fixed calendar date.
To ensure that your filing is complete and correct, follow the instructions in the filing form. If you submit a document that is not public, ensure the papers are marked “CONFIDENTIAL, NOT FOR PUBLIC INSPECTION.” Make sure that your filings are neatly and legibly completed. Avoid stapling your records together, and ensure you have adequate postage for the return. It is a good idea to weigh your envelope and add additional postage as needed.
