Rhode Island Business Tax: Everything You Need To Know
Rhode Island business tax is required for companies registered to do business in the state. These taxes are collected by the Rhode Island Division of Taxation.3 min read
Income tax deadlines for Rhode Island businesses are as follows:
- March 15 for corporations that go by the calendar year, or the 15th day of the third month after the fiscal year ends
- April 15 for partnerships that go by the calendar year, or the 15th day of the third month after the fiscal year ends
If you are unable to meet the deadline, you can file Form RI-7004 to request a six-month extension. This form must be submitted by the tax return due date to be valid. Although this gives you more time to file your taxes, you must still pay your estimated tax liability by the original deadline or you will be charged interest and penalties. Your extension will also be invalidated if you do not pay on time. File your taxes, make payments, and request extensions through the state's online system.
The corporate income tax rate is currently 7%, a decrease from 9% in years past. The personal income tax rate is currently 5.99%. Limited liability companies and corporations are subject to a minimum annual tax of $400. Business taxpayers can also deduct up to $500,000 of the cost of company assets. Qualifying taxpayers can exclude up to $15,000 in retirement fund contributions from their reported income.
Regardless of where your business is located, you must pay sales tax in Rhode Island if you have nexus in the state. Nexus means that your company has a significant presence. You likely have sales tax nexus if you have any of these criteria in Rhode Island:
- A physical location
- Inventory, storage space, or a warehouse
- One or more salespersons, agents, contractors, representatives, or employees
- Tradeshow or craft show attendance
- Merchandise delivery to customers
- A third-party affiliate
If you're required to pay Rhode Island sales tax, your deadline will depend on the filing frequency assigned by the state. You can report and pay sales taxes either online or by mail. The sales tax report must include the total amount of sales during the reporting period and the amount of collected sales tax. Filing is done annually, semi-annually, quarterly, or monthly so the state can monitor your company's growth.
Companies that collect less than $200 in sales tax can file on a quarterly basis. Companies with higher sales must file on a monthly basis. The deadline for filing is usually the last day of the month in which the reporting period ends.
Businesses that hold a retail sales permit must file a sales tax report after every assigned collection period whether or not any sales were made during that time. This is called zero-tax filing.
Businesses that collect sales tax from customers but do not remit the correct amount to the Division of Taxation will be penalized at the rate of 10% of the past-due amount. Interest on the late balance is charged at the greater of 12% or the current rate.
Some businesses are considered non-collecting retailers under Rhode Island's new "notice and report" law. This applies to companies that do not have nexus in the state based on the above criteria but do make at least 200 annual sales transactions to Rhode Island buyers or more than $100,000 in annual gross sales from Rhode Island customers. If this describes your business, you must either meet the Department of Revenue's rigorous sales tax reporting requirements or register for a state sales tax permit and collect and remit sales tax from your Rhode Island customers.
Most products are taxable in Rhode Island, with the exceptions of prescription drugs and clothing. Most services are not subject to sales tax in Rhode Island. One common exception is the provision and installation of cable TV and other telecom services; another is the manufacture or creation of a product.
All of Rhode Island uses the state's 7% sales tax rate. If you own a restaurant or bar, you must also collect the meals and beverage tax (currently 1%).
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