What taxes apply to a new small business?

Taxes Applicable to New Small Businesses in Louisiana

When starting a small business in Louisiana, understanding the tax obligations is essential for smooth operations and compliance. Below are the primary taxes that new businesses should prepare to manage.

State and Local Taxes

• State Income Tax: Louisiana imposes a state income tax on business profits. The rates vary depending on the business structure (e.g., sole proprietorship, LLC, corporation).
• Sales and Use Tax: If your business sells tangible goods or certain services, you must collect and remit state and local sales taxes. Louisiana’s combined state and local sales tax rate varies by location, so register with the Louisiana Department of Revenue to determine applicable rates.
• Franchise Tax: Corporations and LLCs may be subject to an annual franchise tax based on capital employed in the state. This tax requires timely filing and payment to maintain good standing.
• Payroll Taxes: If you hire employees, you must register for state payroll taxes, including withholding state income tax and paying unemployment insurance taxes through the Louisiana Workforce Commission.

Federal Tax Considerations

• Federal Income Tax: All businesses must file federal tax returns. The specific forms and rates depend on your business structure.
• Payroll Taxes: Employers must withhold federal income tax, Social Security, and Medicare taxes from employee wages and remit these to the IRS.

Operational Tips for Managing Taxes

• Register Early: Register your business with the Louisiana Department of Revenue and obtain any necessary tax identification numbers before beginning operations.
• Automate Tax Filing: Use accounting software that supports Louisiana tax rates and filing to streamline compliance and reduce errors.
• Maintain Accurate Records: Keep detailed bookkeeping records of all sales, expenses, payroll, and tax filings to simplify reporting and audits.
• Stay Updated: As of 2026, tax rates and rules may change, so regularly check official Louisiana Department of Revenue resources for updates.