Do I Pay Self Employment Tax in New Hampshire?
While NH lacks a state self-employment tax, business owners have other obligations. Understand the state's unique tax structure and how different liabilities interact.
Many self-employed individuals are familiar with the federal self-employment tax, a combination of Social Security and Medicare taxes. New Hampshire does not have a state income tax on wages and has no direct state-level equivalent to this tax. Instead, New Hampshire levies specific business taxes to which self-employed individuals and their enterprises may be subject. A business owner’s focus should be on determining liability for the state’s Business Profits Tax (BPT) and Business Enterprise Tax (BET).
New Hampshire Business Taxes for the Self-Employed
The Business Enterprise Tax (BET) is based on the total compensation, interest, and dividends paid by the business. A business must file a BET return if its gross receipts exceed $298,000 or if its enterprise value tax base, which is the sum of those payments, is more than $298,000. The BET rate is 0.55%, and it can be due even if the business is not profitable.
The Business Profits Tax (BPT) is a 7.5% tax on the business’s taxable income. A business is required to file a BPT return if its gross business income is over $109,000. The starting point for calculating BPT is often the profit reported on a federal tax form, like a Schedule C. A business may be required to file for one or both taxes depending on its annual figures.
Calculating Your Taxable Base and Final Payment
Calculating your final tax payment begins with determining the liability for each tax separately. For the BET, you apply the 0.55% rate to the enterprise value tax base, which is the sum of all compensation, interest, and dividends paid. For the BPT, you apply the 7.5% rate to your gross business profits, which aligns with your federally taxable business income.
The two taxes are connected through a credit. The amount of BET you owe for the tax year can be used as a credit to reduce your BPT liability. For example, if your calculated BPT is $4,000 and your BET is $1,500, you can apply the $1,500 BET payment as a credit. This reduces your BPT due to $2,500.
Your total New Hampshire tax payment is the sum of the final BPT owed and the full BET owed. In the example above, this would be $2,500 (BPT) plus $1,500 (BET), for a total of $4,000. This credit mechanism ensures that the BET paid directly offsets the BPT, preventing a form of double taxation on the same business activity.
Information and Forms for Your Tax Return
To prepare your return, you will need your total gross business receipts, a breakdown of all compensation paid, and the total interest and dividends your business paid. You also need your completed federal tax return, as figures from forms like the Schedule C are the starting point for the BPT calculation.
The primary form for filing is the Form BT-Summary, which consolidates the calculations for both the BET and BPT. This form guides you through calculating each tax and applying the BET credit. It can be downloaded from the New Hampshire Department of Revenue Administration (NHDRA) website.
Many businesses must make estimated tax payments. This is required for the BPT if the annual liability is expected to exceed $200, and for the BET if the liability is expected to exceed $260. Payments are made using Form NH-1040-ES for proprietorships or Form NH-1065-ES for partnerships.
For calendar year filers, estimated payments are due on the following dates:
- April 15
- June 15
- September 15
- December 15
Filing and Paying Your NH Business Taxes
After completing the Form BT-Summary, you have two methods for filing. You can mail the physical paper forms to the New Hampshire Department of Revenue Administration. Alternatively, you can file electronically through the state’s online portal, Granite Tax Connect, which provides instant confirmation of receipt. The portal is used to enter the figures from your completed forms, not to prepare the return from scratch.
If mailing a return with a balance due, you must include a check or money order made payable to the “State of New Hampshire.” Payments can also be made electronically through Granite Tax Connect, which is the fastest way to ensure your payment is credited on time.