North Carolina (NC) is a favorable state to expand your business into as it boasts low business costs. At 2.5%, its corporate income tax rate is the lowest in the U.S. In addition to financial viability, sourcing quality talent also shouldn’t be a problem in NC as the state is known for its world-renowned education system, as it houses a total of 53 colleges and universities. If accessing domestic and global markets is your business aim, North Carolina’s infrastructure makes the state one of the most favorable for business. NC has a high-end highway system with four international airports and two seaports. Furthermore, transportation and the general cost of living are below the national average in NC, so there is good potential for any business to thrive in this state.
If you have recently expanded your business into this state, or if you’re considering doing so, understanding the cost of apportionment is important to help you accurately report earnings to the IRS and local governments.
S Corporations
- Filing Requirements
- Every corporation doing business in North Carolina and every inactive corporation chartered or domesticated here must file an annual franchise and income tax return using the name reflected on the corporate charter if incorporated in this State, or on the certificate of authority if incorporated outside this State.
- Allocation & apportionment
- One Factor Formula: Sales Factor
- Market-based apportionment
- The market-based sourcing rule in sourcing receipts from the performance of services to the state. In determining the market for receipts from sales of services, the market for service is sourced to North Carolina if, and to the extent, the service is delivered to a location in North Carolina.
- Filing Requirements
Partnerships
- Filing Requirements
- Partnership doing business in North Carolina that is required to file a federal partnership return must file a North Carolina information return for the taxable year. The term “partnership” includes a limited-liability company that is classified for federal income tax purposes as a partnership, as well as, a publicly traded partnership whereby the partners’ distributive share of the partnership’s net income during the tax year is more than five hundred dollars ($500.00).
- Allocation & apportionment
- One Factor Formula: Sales
- Market-based apportionment
- The market-based sourcing rule in sourcing receipts from the performance of services to the state. In determining the market for receipts from sales of services, the market for service is sourced to North Carolina if, and to the extent, the service is delivered to a location in North Carolina.
- Filing Requirements
Employees & individual filers
- Filing Requirements
- Every resident of North Carolina whose gross income for the taxable year exceeds the amount shown in the Filing Requirements Chart for Tax Year 2021 for the individual’s filing status.
- Every part-year resident who received income while a resident of North Carolina or who received income while a nonresident that was (1) attributable to the ownership of any interest in real or tangible personal property in North Carolina, or (2) derived from a business, trade, profession, or occupation carried on in North Carolina, or (3) derived from gambling activities in North Carolina and whose total gross income for the taxable year exceeds the amount shown in the Filing Requirements Chart for Tax Year 2021.
- Every nonresident who received income for the taxable year from North Carolina sources that was (1) attributable to the ownership of any interest in real or tangible personal property in North Carolina, or (2) derived from a business, trade, profession, or occupation carried on in North Carolina, or (3) derived from gambling activities in North Carolina and whose total gross income from all sources both inside and outside of North Carolina for the taxble year exceeds the amount shown in the Filing Requirements Chart for Tax Year 2021. For nonresident business and employees engaged in disaster relief work at the request of a critical infrastructure company, refer to the Personal Tax Division Bulletins.
- Filing Requirements
Download our Multi-State Tax Filing Requirements Guide
Ensuring Accurate Tax Filing
Keeping a handle on these different laws and tax implications might be difficult for your staff members but can be accomplished by outsourcing a CPA. Allow an expert who deals with business structuring, accounting, and taxation regularly set up accounting software to factor in applicable tax laws for each US state.
Fusion CPA recently expanded into new states bringing us firsthand experience and knowledge. We have a team of certified public accountants who are highly skilled in handling multistate taxes. Our team of professionals understands the federal and state laws in various states and jurisdictions.
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This blog article is not intended to be the rendering of legal, accounting, tax advice or other professional services. Articles are based on current or proposed tax rules at the time they are written and older posts are not updated for tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided on this website is not all-inclusive and such information should not be relied upon as being all-inclusive.
