Quote:
Originally Posted by DickR
What determines if someone has self-employment income that is subject to the business profits tax? If he has such income, doesn't he in effect have a "business?" And what constitutes the "profit" from that business on which he would owe a tax - does it include income he takes from the business as "salary?"
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If you have gross receipts of less than $50,000 you do not have to file a BPT return. The BPT rate is 8.5% of NH taxable income. If you end up paying Business Enterprise Tax (BET), you can use that as a credit against any BPT owed. Business Enterprise Tax is a .75% tax on the following expenses of a business; salaries and wages, interest paid, dividends and retirement contributions. You are not required to file a BET return if the sum of these expenses is less than $75,000.
If you are self employed, I'd assume you don't need to take a salary. You will get taxed as ordinary income on the net income that you make (Revenues - Expenses). Self employed individuals are subject to SE tax (federally) as they are essentially both the "employer" and "employee". The SE tax is in place as a self-employed individual does not have any withholdings (federal, SS, med). Regular, non self employed employees, receive a paycheck and these taxes are withheld on a regular basis.