A franchise tax is a state tax levied on certain businesses for the right to exist as a legal entity and to do business within a particular jurisdiction. These are levies that are paid in addition to income taxes. They are usually paid annually at the same time other taxes are due. The amount of franchise tax can differ greatly depending on the tax rules within each state. Some states calculate the amount of franchise tax owed based on an entity's assets or net worth, while other states look at the value of a company's capital stock.
As of 2021, states that require franchise tax are:
- Alabama (AL)
- Arkansas (AR)
- California (CA)
- Delaware (DE)
- Georgia (GA)
- Illinois (IL)
- Louisiana (LA)
- Mississippi (MS)
- New York (NY)
- North Carolina (NC)
- Oklahoma (OK)
- Tennessee (TN)
- Texas (TX)
Middesk does not pay franchise taxes on your company's behalf.
Middesk will handle franchise tax filings for you only in states where franchise taxes are managed by the Secretary of State. Those states are:
- Arkansas (AR)
- Delaware (DE)
In all other states, companies must directly handle franchise tax filings.
Middesk is not able to provide legal advice to its customers on whether their specific business should be registered for franchise tax in a particular state. Please consult your legal counsel, finance department, or accountant for guidance pertaining to your specific business.
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