Mazuma is now Vyde

History Behind State & Local Taxes

We can take paying state & local taxes back to the Founding Fathers. From the start of our country, until current day the Federal Government has always recognized the rights of the states to impose taxes on its citizens. When the Constitution was written, the ability to impose taxes was included; however the states retained the right to impose any type of tax except those that are clearly forbidden by the United States Constitution. That’s why Federal Taxes remaining mostly the same over the years while state taxes have the ability to fluctuate year to year as well as between states.

Monies from the state & local taxes are obtained through tax collection, fees and licenses as well as the money granted by the Federal Government to each of the 50 states. The income earned is put towards providing public services including public schools, police forces, health and welfare benefits and the operation and maintenance of state governments.

The most common state & local taxes are the personal income tax, corporate tax, sales, tax and real property tax. Personal income tax and sales tax were introduced in many states between 1930-40’s.

How to Register for State & Local Taxes

It seems that when it comes to taxes, things get confusing quickly. Federal taxes have enough ins and outs, but putting things right side up for a small business when it comes to state & local taxes could make you think twice about doing them yourself. If that’s the case though, we’ve got a few pointers for you:

  1. You’ll want to find out the information that is recent and accurate for your state. Here’s a good place to start: Tax Info by State
  2. You’ll want to register your business entity at these sites so you’re set up when it’s time to file your tax return or pay quarterly taxes.
  3. You’ll want to gather all your financial paper work together before you start working on your return – need a checklist to get you started? Here you go.
  4. If you sell a product or service that is taxable and you’re in  a sales tax state, you’ll need to set up a process to collect and pay the monies you collect. Not sure if you’re supposed to be collecting sales tax? No problem – every state except Alaska, Delaware, Montana, new Hampshire, or Oregon has sales tax. Remember, if you’re selling in more than one state you’ll need to be collecting and filing for sales tax in each of the states you’re making sales in.