Zortec Business Tax : Session 1 LOCAL GOVERNMENT CORPORATION

Changes in Business Tax-  ● Rate change in 2002  ● Public Chapter 530 (2009)  ● Public Chapter 313 (2013)  Uniformity and Small Business Relief Act of 2013

Minimal or Standard

Minimal Activity License  A minimal activity fee of $15.00 is due annually for all businesses with annual gross receipts of more than $3,000, but less than $10,000.

Minimal Activity License  This fee is collected and kept on the local level. It is the responsibility of clerk’s office to collect this tax.

What’s the fee for a Business License? The fee should never be more than $ There is no recording or processing fee for either Minimal or Standard License. If you charge more than the required $15.00, please, check with the state.

Minimal Activity License  What report do you run to list all Minimal Activity Accounts?

City’s Officials Responsibility  Since it is the local officials responsibility to collect minimal activity tax, you are essentially responsible for printing and mailing the notices.  How do you do this you might ask? In the billing menu you have an option to print license notices. You will need to run those accordingly.

Printing Minimal Activity Notices O-Only Minimal I-Include Minimal E-Exclude Minimal

Minimal Activity License  A business may request a status change at any time. If the business gross receipts exceeds the $10,000 they may be updated from a Minimal (M) to a Standard (R) account with $15.00 initial payment due.  The clerk should notify the state of this change.

Standard Business  A standard business will gross more than $10,000 annually.  City clerks office will collect a $15.00 initial tax fee.  All information received from the business will be submitted to the state by exporting an LBN file.

Standard Business Cont’d  The state will assign the business a State Business Number which is imported on an SBN file.  Business will renew their license annually to the state.  The city is responsible for printing and mailing the license when they receive a clearance on an SBT file.

Creating a New Account Required Information for State Transfer  Application must be complete with the business owner(s) name, address, phone, address, social security number or FEIN. Social Security Number is preferred.  Both Minimal and Standard Business License Applications can be found at on the City Officials Resource Page.

Line 9 is the Entity’s FEIN. Line 14 is the Owner’s FEIN. The two CANNOT be the same. If the Owner is a business entity/corporation then the Owner’s FEIN is acceptable and the appropriate selection would be Owner/Company, otherwise Social Security Number must be used. Not sure about the classification check state website at Under the Taxes menu find Business Tax here you’ll find classifications.

How to Determine Fiscal Year End (FYE)  FYE is the two digit number for which month fiscal year ends. i.e.: FYE Beginning Date Ending Date 01 02/01/ /31/ /01/ /29/ /01/ /31/ /01/ /30/2016 ***Note most businesses will be opened with the FYE12, unless owner or state specifies differently.

Understanding What the Period means  Your initial Period is chosen based on when the next due on date is, i.e.: If you have a business opening as a FYE02 with opening date of 3/01/2016 then the period will be The business will have a tax period beginning date of 03/01/2016 ending date of 02/28/2017 with the next due on 06/15/2017.

 If you have a Business opening as a FYE09 with an opening date of 10/01/2016 their initial period would be 2018! Their tax period will be 10/01/ /30/2017, but their next tax wouldn’t be due until 01/15/2018.

Where do you find the Period?  When setting up a new business the Period goes in the Initial Pd section on screen 1.  This also determines the Period for your License on screen 3.

How to Enter a License from Beginning to End  File Maintenance

 Business File

Create

For AutoNumber press or you can assign a specific number

Screen 1Required Fields

Complete Business Name and Physical Location Owner/responsible party’s name, address, and title Screen 1Required Fields

Initial Period required The Class and Type are also required. The Class, Type, and PIA can all be selected by pressing Search and Select. Mail can be directed to (R)Responsible Party or (B)Physical location. Other required fields are the date open, SS#, and FYE. Screen 1Required Fields

Required Owner Info At least one owner must be listed with their home address and phone number. The number of owners and their info must match screen 13.

Screen 13 Required Fields

SOS ID# is the Security of State ID#. This will be assigned by the state. Business may already have this number on their application. If not it will be imported from the state on the SBN file.

Screen 13 Required Fields Federal Employment # and Sales Tax # should be no more than 9 digits. Don’t include spaces or dashes. Must specify if they are required or not and if they have been applied for if the number is not available. If the FEIN is entered on screen 1 it will display on screen 13 and vice versa.

Screen 13 Required Fields Ownership Types can be displayed by selecting the F3 key on your keyboard.

Screen 13 Required Fields address Location SITUS is assigned to each city by the state. Some cities are in multiple counties are assigned a code for each county. Important to make sure the SITUS code is correct. Transaction type is reason for applying. 1-New Business 2-Additional Location 3-Purchase of Existing Business

Screen 13 Required Fields Owner Type is the type of ownership for the owner 1-Member 2-Officer 3-Partner 4-Owner/Individual 5-Owner/Company 6-Contractor ID Type specifies 1-FEIN 2-SSN Activity status Minimal(M)/Standard (R) When an account is create this flag will be N. After you create and send your LBN file to the state this flag will change to Y. Do not Change this manually when creating your business.

Review  Who needs a minimal activity license?  Who’s responsible for collecting minimal activity license fees?  What is the fee for a business license?  How often are the minimal activity license fees renewed?  Can a business change from a Minimal status to a Standard?  Who receipts renewals for Standard license?