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STARTING AND OPERATING A BUSINESS IN NEW HAMPSHIRE Copyright © 2004, Michael D. Jenkins
CONTENTS OF THIS SECTION:
I. INTRODUCTION I. INTRODUCTION New Hampshire has an unusual and very favorable tax structure under which businesses operate, with some of the lowest per capita taxes in the nation. Unlike most states, New Hampshire imposes no income tax as such on individuals (except for a tax on investment income), no franchise tax on corporations, and no general sales or use tax. Instead, a business profits tax is imposed on the net income of all types of business entities, including corporations, partnerships, LLCs and sole proprietorships. Also, a business enterprise tax, somewhat like a capital stock or franchise tax, is imposed on all businesses. New Hampshire's very low taxes, a rarity among Northeastern states, has made it an attractive place for individuals to raise families or retire, and its rapid growth has led to an excellent business climate for starting large or small businesses. In particular, large numbers of people have fled Massachusetts ("Taxachusetts") and its high taxes in recent years, to move to New Hampshire, where they pay no sales taxes and no income tax except on business or investment income. Among other attractions, the state of New Hampshire has the nation's second-highest standard of living, and the second-lowest crime rate. It also has by far the lowest per capita state tax burden of any state, according to a recent U.S. Census Bureau report on state tax collections. In contrast, nearby Connecticut and Massachusetts had the highest and fifth-highest per capita total state tax burdens, with Massachusetts having the highest income tax collections per capita in the nation. A 2005 study by the Tax Foundation showed New Hampshire as having the second-lowest tax burden, as a percentage of per capita income, second only to Alaska. New Hampshire has adopted a limited liability company (LLC) law, and a limited liability partnership (LLP) law, so that businesses operating in New Hampshire in LLC or LLP form may obtain the advantages of limited liability, without incorporating or becoming subject to federal corporate taxation, generally, although all businesses are taxed in the same manner for state purposes under the New Hampshire business profits tax and business enterprise tax, regardless of the type of legal entity adopted. At present, the state's economy is very robust, in terms of the level of unemployment and other economic measures. For example, in June, 2004, the state's unemployment rate was a low 3.9%, down from an already low 3.2% a year earlier. This compares favorably to a national unemployment rate of 5.6% for the same month. To view the latest federal Bureau of Labor Statistics unemployment rate data for New Hampshire or any other state, visit the BLS website. II. LEGAL ENTITIES -- FILING FEES AND REPORTING REQUIREMENTS. (a) In General. A business that operates in New Hampshire can do so as a sole proprietorship, a general or limited partnership, a corporation, or a limited liability company. However, unlike most other states, New Hampshire does not recognize S corporation tax status for income tax (business profits tax) purposes -- S corporations are subject to the same New Hampshire business profits taxes as other corporations and unincorporated businesses. New Hampshire also provides for limited liability partnerships, in which no partner is liable for certain debts of the partnership, somewhat like a corporation or LLC, but with fewer legal formalities than are required for either a corporation or an LLC. Each of the above entities is discussed below, along with the basic requirements for forming such an entity and any general ongoing (non-tax) reporting requirements that are applicable to it. The tax treatment of each form of legal entity is discussed in Section IV below. (b) Sole Proprietorships. In general, sole proprietorships in New Hampshire can be formed with no formalities. However, as discussed in Section IV(b), it will generally be necessary to obtain one or more local business licenses from cities or counties in which you operate and, in some cases, state licenses, as well. Businesses that serve meals or rent rooms and which are subject to the meals and lodging tax must obtain a license from the state, which must be renewed by June 30th of each odd-numbered year. Apply for a license and provide a bank account debit authorization to the state on Form CD-3, available from the Department of Revenue Adminstration. Unlike other states, New Hampshire requires most sole proprietorships to file annual business profits tax and business enterprise tax returns. However, the individual owner of a sole proprietorship does not file any state income tax return, unless he or she has more than $2,400 ($4,800 if filing jointly) of interest and dividend income. The state income tax is only imposed on such investment income. See Section IV(c) for information on the New Hampshire income tax on investment income and filing requirements for individuals, as well a description of the business profits tax and business enterprise tax, both of which apply to most businesses, including sole proprietorships. Unless subject to special taxes, such as the meals and rentals tax, your sole proprietorship will not generally be required to register with the state before beginning to do business, unless you are using a fictitious name, such as "John Smith Enterprises" rather than just using your name, such as "John Smith." See Section IV(g) for more information on registering fictitious names or trade names used by your business. (c) Partnerships. As a rule, general partnerships in New Hampshire can be formed with no formalities, although it is highly advisable to have a written partnership agreement. However, as discussed in Section IV(b), it will generally be necessary to obtain one or more local business licenses from cities or counties in which you operate and, in some cases, state licenses, for any type of partnership, including general or limited partnerships, or limited liability partnerships. A limited partnership, in which there is at least one general partner (who is liable for partnership debts) and at least one limited partner (who is not liable for partnership debts), may also be formed under New Hampshire law. Unlike a general partnership, a limited partnership must generally have a written partnership agreement, and must file with the secretary of state a New Hampshire Limited Partnership Application, Form LP-1, together with a filing fee of $50 and two copies of a certificate of limited partnership. Foreign limited partnerships must register before being allowed to do business in New Hampshire, and must pay a registration fee of $50. For more information on limited partnership filing requirements, see the contact information for the offices of the New Hampshire Secretary of State, listed in Section VI(a). Limited liability partnerships (LLPs) are a new form of partnership permitted under the laws of New Hampshire. Like an LLC, an LLP provides limited liability for its owners, while retaining the tax advantages of a partnership for federal income tax purposes (but not for New Hampshire tax purposes). However, unlike an LLC, an LLP typically operates like a regular partnership, and is not required to file articles of organization. To form an LLP in New Hampshire, you must register on Form LLP-1 and pay a filing fee of $50 to the secretary of state. Foreign LLPs, those created under the laws of another state, must also register with the secretary of state and pay a fee of $50. Every domestic and foreign LLP must also pay an annual fee to the secretary of state in the amount of $100. Note that the LLP law gives much less protection to partners in an LLP than state law grants to stockholders of a corporation, or members of an LLC. An LLP shields a partner in an LLP from tort liability from claims brought against another partner in the LLP or employee of the LLP for malpractice or other such wrongdoing, but it does not offer a partner any liability protection from his or her own acts or omissions. For more information on LLP registration and reporting requirements, see the contact information for the offices of the secretary of state, listed in Section VI(a). Note that one potential drawback of LLPs, if you will do business in other states besides New Hampshire, is that you may not enjoy limited liability with regard to creditors of the LLP if you do business in some such states. Some states, like California and New York, only recognize certain types of professional partnerships as LLPs. Such other states may simply treat your LLP like an ordinary general partnership, with no limitation of liability. A partnership agreement, for any type of partnership, should spell out in considerable detail such matters as the following:
Unlike most states, which do not tax the income of a partnership at the partnership level, New Hampshire imposes the Business Profits Tax, based on income, directly on the partnership. However, the partners, as individuals, are not subject to tax on the income of the partnership, as New Hampshire has no income tax on individuals, except on dividends and interest. A partnership may also be subject to the Business Enterprise Tax, as described in Section IV(c), and if it has more than $2,400 of dividend and interest income, it will also be subject to the state income tax on investment income. Partnerships are required to file annual tax returns with the state. For details on New Hampshire partnership tax return filing requirements, see Section IV(c). (d) Corporations. To form a corporation in New Hampshire, you must file articles of incorporation with the New Hampshire Secretary of State and pay a fee of $50. A foreign corporation (one formed under the laws of another state or a foreign country), must obtain a certificate of authority before it may legally conduct business in New Hampshire, by filing an application for a certificate of authority and paying a filing fee of $50. For more information on filing articles of incorporation or applying for a certificate of authority to do business in New Hampshire, see the contact information for the offices of the secretary of state, listed in Section VI(a). In addition, once your corporation is formed, it will be required to file annual reports each year between January 1 and April 1 and pay a filing fee of $100 with the annual report each year. Failure to file this report on a timely basis could result in suspension or revocation of your corporation's charter, in addition to the $50 late fee penalty. In addition to paying federal income taxes on its income, a corporation that does business in New Hampshire must also file New Hampshire Business Profits Tax returns with the state. See Section IV(c) for a discussion of state Business Profits Tax rates and tax return filing requirements. Corporations that do business in New Hampshire are also subject to a corporate franchise tax, called the Business Enterprise Tax. Unlike franchise taxes in other states, this tax applies equally to unincorporated businesses. For tax forms and more information on Business Profits Tax and Business Enterprise taxes in New Hampshire, see the contact information for the offices of the New Hampshire Department of Revenue Administration, listed in Section VI(a). (e) S Corporations. An S corporation is simply a regular corporation that has elected, for federal or state income tax purposes, or for both, to be taxed somewhat like a partnership, with its income, losses and tax credits flowing through to its owners, who report such income, losses, or credits on their individual tax returns. Unlike most states, New Hampshire does not treat S corporations differently from regular corporations (C corporations) for state income tax purposes. In fact, corporations are treated the same as unincorporated businesses, generally, for both income (New Hampshire Business Profits Tax) and franchise (Business Enterprise Tax) tax purposes. While dividends paid by an S corporation are usually non-taxable for federal income tax purposes, such dividends are subject to the New Hampshire tax on investment income. (f) Limited Liability Companies. New Hampshire, like every other state in the U.S., has adopted a limited liability company (LLC) law. Thus, in addition to the traditional choices of a sole proprietorship, partnership, or corporation, a business that operates in New Hampshire may also choose to operate in the form of an LLC. In most states, LLCs are very attractive entities for many small businesses, in that they offer the same protection as a corporation from creditors for debts of the business, while offering much of the flexibility plus the flow-through tax treatment of a partnership for federal tax purposes, although this is not the case in New Hampshire, which treats all business entities essentially the same for tax purposes. See Section IV(c) for a discussion of the income tax treatment of LLCs under New Hampshire tax laws. To form an LLC under the laws of New Hampshire, one or more persons must file a certificate of formation, Form LLC-1, with the secretary of state, which must be accompanied by a filing fee of $50. New Hampshire state law also allows formation of one-owner LLCs, which qualify for treatment as sole proprietorships for federal tax purposes. Foreign LLCs, those formed under the laws of another state, must obtain a certificate of authority to do business in New Hampshire, by filing an application for a certificate of authority, Form FLLC-1, with the secretary of state and paying a filing fee of $50. In addition to initial filing fees, an LLC formed in New Hampshire must subsequently file annual reports and pay an annual report filing fee of $100 with each such annual report. A foreign LLC is also required to file an annual report and pay the applicable filing fee of $100. For more information on filing a certificate of formation for an LLC, see the contact information for the offices of the secretary of state, listed in Section VI(a). III. BUSINESS ACQUISITIONS (a) In General. When acquiring an existing business, there are a number of state legal and tax issues you or, preferably, your business attorney, should attend to before closing the purchase. These include matters such as doing a title search for any real property that is being acquired, checking for any recorded security interests on personal property items, and thoroughly researching county, state, and federal records for any judgment liens, tax liens, or other liens, before property is acquired. You will also benefit from consulting a tax advisor before the agreement of sale is negotiated, in order to seek a structuring of the agreement so that the purchase price is allocated among the assets in a way that favors you. You may be able to obtain considerable tax savings if the purchase price is allocated in a way that gives you the best possible tax results under federal and state income tax laws, and other state tax laws, such as property tax laws. Depending upon the state (or states) in which the seller's assets are located, you may also have to comply with state bulk sale or bulk transfer laws. You should also obtain tax releases from various state taxing agencies, as discussed below. (b) Bulk Sale Laws. Typical bulk sale laws require either publication of legal notices to all creditors in advance of the sale and recording of such notices in some cases, or maintenance of detailed lists of the property to be transferred, for inspection by the public. New Hampshire is one of the states that has repealed its bulk sale laws, so you no longer have to be concerned with this requirement when buying a business in New Hampshire. (c) Tax Releases. When you acquire an existing business, you will want to make sure that you do not unwittingly become liable for any unpaid taxes owed by the seller. Typically, to protect yourself, you will need to receive a tax release or releases from various state taxing agencies, for such taxes as sales and use tax, income tax withholding, and state unemployment taxes, in each state in which the seller does business. If you fail to obtain such a release or written statement from the tax agency that the seller is not delinquent on any tax payments, you will be held responsible for such tax if it is not withheld from the purchase price proceeds and paid to the state at the time the sale of the business transpires. In New Hampshire, you should obtain a tax release for unemployment taxes from the Employer Status Section of the new Hampshire Department of Employment Security. In addition, be sure that the business you are buying is current in its payments of Business Profits and Business Enterprise Taxes, by having the seller obtain a Certificate of Good Standing from the Department of Revenue. (d) Unemployment Tax Rating of Seller. In addition to obtaining tax releases, you may find it advantageous to succeed to the seller's unemployment tax experience rating, if the seller has a tax rate lower than you would otherwise obtain as a new business. In most states, succeeding to the seller's experience rating is optional and you are required to apply for it, if you wish to be treated as a successor employer. However, in New Hampshire, you will automatically, by law, inherit the seller's merit rate and past experience history, and thus will be treated as a successor employer, if you acquire substantially all of the New Hampshire business assets of the seller and intend to continue the seller's business. Therefore, it is important to find out in advance if the seller's experience record you will succeed to is a favorable one or not. IV. NEW HAMPSHIRE TAXES AND OTHER GENERAL REQUIREMENTS. However, businesses may be subject to any or all three of the following taxes:
(b) State and Local Licensing. Nearly any business, operated anywhere in the United States, will have to have at least one government license of some kind. In most cases, this will be a local license, issued by your city or county. Before you open your business, contact your local city or county hall and find out if your particular business needs one or more local licenses. Most kinds of local business licenses are granted upon payment of a fee, with no further requirements, except possibly for annual or other periodic renewal fees. However, if you are engaging in any kind of food business, you will usually need to also obtain a health department permit and show that you are in compliance with health department food-handling requirements. In addition, be sure to check with an attorney or local government zoning or planning department officials to determine if your business will be in compliance with all local zoning and planning restrictions. If you own or rent any type of facility, you will generally need fire department permits, showing that you meet fire safety codes and any construction or improvements to an existing structure will usually require a building permit. If you intend to simply operate your business from your home, you may be in violation of local zoning requirements, but this is less likely to be a concern if you don't have clients, customers, suppliers, or employees coming to your house on business, on a regular basis. State governments have also traditionally required special licenses for many kinds of professionals, such as physicians, dentists, lawyers, and accountants. To further protect consumers, New Hampshire has expanded the list of occupations that must be licensed by the state to include many other occupations. Most state licenses not only require payment of fees, but are only issued for a given profession or occupation upon showing that you have completed certain educational or experience requirements, or passed certain tests, or some combination of the foregoing. A partial list of professions or occupations requiring licenses includes:
For information on state licensing and business registration requirements in New Hampshire, see the contact information for the offices of the secretary of state, listed in Section VI(a). (c) Income and Franchise Taxes. New Hampshire is one of the few states that does not have a general individual income tax. However, it does have a tax on the income of all types of businesses, whether or not incorporated -- the Business Profits Tax. It also imposes a Business Enterprise Tax on all but very small businesses that operate in the state. The New Hampshire income tax is imposed at a flat rate of 5%, and applies only to dividends and interest. It applies only if you have over $2,400 (or $4,800, if filing a joint return) of dividends and interest for the year. The income tax also applies to any partnership or LLC with over $2,400 of interest and dividend income. Estimated tax payments, on the April 15th, June 15th, September 15th, and the following January 15th are required, unless the tax liability for the year is less than $500. Individual taxpayers indirectly pay the state income tax on their business earnings from a sole proprietorship, but not on an individual income tax return. Similarly, they do not pay state tax directly on their share of the earnings of a pass-through entity, such as a partnership, S corporation, or LLC. Instead, the Business Profits Tax applies to the business entity (sole proprietorship, partnership, or LLC), the same as for corporations. The Business Profits Tax is an 8.5% tax on the net income of any business that has gross business income of over $50,000, regardless of whether the business is a sole proprietorship, partnership, LLC, C corporation, or S corporation. You are allowed a deduction equal to a fair and reasonable compensation as a sole proprietor, or for each partner in a partnership or member or an LLC, with a minimum personal services deduction of $6,000 per owner each year, for each person who actually devotes time and effort to the operation of the business. A credit is generally allowed for Business Enterprise Tax paid, if any. A sole proprietorship must file an annual Business Profits Tax return (Form NH-1040) by attaching it to your Business Enterprise Tax return (Form BET-PROP) and filing both returns by the 15th day of the fourth month after the end of your tax year (by April 15th for a calendar year taxpayer). Partnerships, or entities taxable as partnerships, such as LLCs, are also subject to the Business Profits Tax. However, a partnership (or LLC taxable as a partnership) must file Form NH-1065 rather than Form NH-1040 with its Form BET, by the 15th day of the fourth month after the end of its taxable year. The partnership pays the tax on the business income, but the partners are not subject to tax on their share of the partnership's income, since New Hampshire generally does not impose a personal income tax on individuals. Also, if a partnership has more than $2,400 of dividend and interest income, it must file Form DP-10 and pay the 5% state income tax on investment income. Corporations (including S corporations) are generally subject to the same rules for payment of Business Profits Tax as unincorporated businesses. However, corporations must file their Business Profits Tax on Form NH-1120 along with Form BET (for Business Enterprise Tax) by the 15th day of the third month after the end of the taxable year (by March 15th in the case of a calendar year corporation). In New Hampshire, unlike most other states, limited liability companies (LLCs) are taxed like corporations and other unincorporated businesses for state income tax (Business Profits Tax) purposes. Unless it is taxed as a corporation for federal tax purposes, an LLC reports its Business Profits Tax on the same form as partnerships, Form NH-1065, due on the 15th day of the fourth month after the end of its taxable year. Estimated tax payments by sole proprietors, partnerships, LLCs, or corporations are due in four installments of 25% for each quarter of the tax year, if the total Business Profits Tax for the year is expected to be $200 or more. Payments are due on April 15th, June 15th, September 15th, and December 15th, in the case of a calendar year business. Penalties will be imposed for failure to make the required estimated tax payments on a timely basis. The other state tax that applies generally to all New Hampshire businesses, regardless of whether they are incorporated or not, is the Business Enterprise Tax (BET). The BET is a tax of 0.75%, imposed on a company's "tax base." The tax base is defined as the sum of the company's compensation expense, interest expense, and dividends paid (in the case of a corporation) for the year. The BET applies to any business if its gross business receipts for the year exceed $150,000 or if its tax base is $75,000 or more. As with the Business Profits Tax, companies are required to make estimated tax payments of BET on the same dates as Business Profits Tax estimated tax payments, if the total BET for the year is expected to be $200 or more. The annual BET tax return, Form BET (or, for sole proprietorships, Form BET-PROP), is due on the 15th day of the third month after the end of the tax year for companies filing federal corporate tax returns, or by the 15th day of the fourth month after the end of the tax year for other businesses. Any BET paid can generally be claimed as a tax credit against your Business Profits Tax, or if it exceeds your Business Profits Tax Liability, can be carried forward for five years. Thus, a business will generally pay either BET or Business Profits Tax, but not both. (d) Sales and Use Tax. There is no general sales or use tax in New Hampshire. However, the state does impose a sales tax of 8% on meals and room occupancy, as well as a 7% tax on all two-way communications services. The meals tax applies to restaurants, generally, or to any food or beverage prepared by a restaurant, whether it is to be consumed on-premises or off. Groceries or other food that is packaged off the premises are not subject to the meals tax, except for sandwiches, catered or delivered meals, or beverages in unsealed containers. The rooms tax applies to any rental of lodging for less than 185 days. Once a renter has remained in the lodging facility for 185 days, a refund can be obtained of the tax that has been paid. Before making any taxable sales subject to the meal or rooms tax, you will need to register with the Department of Revenue Administration for an Operator's License. Meal and room occupancy tax reports can be filed on-line, or use Form DP-14. For more information on New Hampshire meals and room occupancy tax registration and compliance, see contact information for the offices of the Department of Revenue Administration in Section VI(a). (e) Real and Personal Property Taxes. In New Hampshire, as in every other state, any business real estate you own will be subject to real property taxes. In general, there is little that you must do, unless you wish to challenge your assessed valuation, since the assessor will bill you for each year's property taxes as they come due. Many cities and towns also impose an annual $10 per person residence tax. New Hampshire also imposes personal property taxes on tangible personal property. However, certain types of business personal property, such as business inventories and business equipment and machinery, are exempt from personal property tax in New Hampshire. While New Hampshire generally taxes tangible personal property, it does not impose a property tax on intangible personal property, such as stocks, bonds, promissory notes, and other such paper assets. (f) Other Business Taxes. New Hampshire imposes a number of other taxes on businesses, some of which may affect you. These include:
(g) Trade Names. A trade name, also known as a fictitious or assumed name, is any name used in the course of business that does not include the actual legal names of all the owners of the business. Thus, if your business goes by any name other than your own real name, it is operating under a trade name. The same is true of a corporation, if it operates under a name other than its legal name. A trade name might also be one that suggests the existence of additional owners, by using such words as "company," "associates," or "group." In most states where you do business, it will be necessary to register a trade, fictitious, or assumed name, so that people who do business with you can find out who the actual owners of your business are. You may also want to register any such trade name, as a means of protecting against other companies usurping that particular trade name. In New Hampshire, if you use a trade name, you must register it with the secretary of state's office on Form TN-1. A fee of $50 must be submitted with the registration, which continues in effect for five years, after which you must renew the registration. V. EMPLOYER REQUIREMENTS IF YOU HAVE EMPLOYEES (a) Employer Registration and Withholding. If you have any employees, you will be required to withhold both federal income tax and FICA taxes from their wages. Fortunately, since New Hampshire has no general state income tax on wages, you will not need to be concerned with any obligation to withhold state income tax. However, if you pay more than a minimal amount of wages, you will most likely be required to pay state unemployment tax, and will have to register with the state as an employer for unemployment tax purposes, as described in Section V(b). (b) Unemployment and Other State Payroll Taxes. If your business has one or more employees, you, as an employer, will be required to pay state unemployment tax based on the amount of such wages paid. Employers subject to the New Hampshire unemployment tax are required to register with the Department of Employment Security on the Employer Status Report form. New employers are required to pay tax at a rate of 2.7% in 2004 on the first $8,000 of wages paid to each employee. After you have had employees for a while, you will develop an unemployment tax experience rating. This rating is based on the number of employees you terminate who then claim unemployment benefits and the amount of such benefits paid to those former employees, under complex formulas. The state will inform you when they have assigned you an individual tax rate based on your firm's experience rating. That rate may be higher or, if you have had relatively few benefit claims charged to your account, lower than the standard new employer tax rate you initially were paying. All state unemployment taxes are imposed upon you as the employer, and, under New Hampshire law, cannot be charged to your employees or withheld from their wages. For more information on your New Hampshire unemployment tax obligations as an employer, see the contact information for the offices of the New Hampshire Department of Employment Security, listed in Section VI(a). (c) Workers' Compensation. Workers' compensation insurance is a state-mandated insurance requirement for most employers, in almost every state. In New Hampshire, virtually all businesses with one or more employees are required by law to have workers' compensation insurance, except those able to self-insure. Note, however, that a sole proprietor or a partner in a partnership is generally not considered an employee. Similarly, up to three executive employees of a corporation or managing members of a limited liability company may be excluded as employees, and thus are not required to be covered for workers' compensation purposes. Workers' compensation provides wage loss and medical benefits to employees injured on the job and it protects you, as an employer, from legal action for damages for injuries or job-related illnesses suffered by your employees. In effect, it is a "no-fault" insurance system for work-related injuries or illnesses. Thus, if you fail to obtain required workers' compensation insurance, and an employee is injured on the job, you will have opened yourself to unlimited liability and severe legal consequences, so it is very important to obtain workers' compensation insurance for your employees. Be aware that neither general liability nor health and accident insurance can properly substitute for workers' compensation insurance. As an employer, you must notify injured employees of their benefits and post a notice in the workplace informing your employees of their workers' compensation coverage. For more detailed information regarding your obligations as an employer under the New Hampshire workers' compensation laws, contact your insurance carrier or see the contact information for the offices of the New Hampshire Department of Labor, listed in Section VI(a). (d) State Wage and Hour Laws. Some employees of certain small firms not engaged in interstate commerce are not covered by the federal minimum wage and overtime laws. However, even if few or none of your employees are covered by the federal wage-hour laws, if, for example, because your firm does less than $500,000 a year in gross sales and the employees in question are not deemed to "...engage in (interstate) commerce...," they will still generally be subject to the New Hampshire wage-hour laws, which provide for a state minimum hourly wage that is no lower than the federal minimum, currently $5.15 an hour. New Hampshire state law also generally requires payment of time-and-a-half overtime pay, for hours worked in excess of 40 a week. Besides the federal wage-hour posters that you must display in the workplace, you must also display a state wage-hour poster, which you can obtain from the Wage and Hour Division of the New Hampshire Department of Labor. In addition to wage-hour laws, most businesses are subject to federal child labor laws, which put numerous restrictions on the working hours and kinds of work in which minors under the age of 18 may engage. Your business must also be cognizant of similar state child labor laws, in New Hampshire. (e) State Occupational Safety and Health Laws. Employers in New Hampshire must comply with state and federal job safety laws designed to prevent injuries resulting from unsafe or unhealthy conditions in the workplace. Because New Hampshire, like a majority of other states, has not set up its own enforcement agency, the federal Occupational Safety and Health Administration (OSHA) enforces health and safety standards in New Hampshire. However, the state requires you to submit an annual summary of your workplace safety program to the Safety and Training Division of the New Hampshire Department of Labor, and the state can provide free safety consultations for employers, to help employers comply with OSHA regulations and safety standards. Note that while you may obtain a free safety consultation from federal OSHA experts, they must and will cite you for any violations they discover at your workplace. This is not the case with state safety inspections. If you request a safety consultation from the Division of Public Health Services/OSHA, of the New Hampshire Department of Health and Human Services, and they detect violations, they will not cite you if you promptly correct the unsafe conditions. Nor will they report the violations to federal OSHA, nor "guarantee" that you will pass a federal OSHA safety inspection. For information on your job safety and health obligations as an employer, required posters, and possible on-site safety consultations, see the contact information for the Concord offices of Division of Public Health Services -- OSHA, a division of the New Hampshire Department of Health and Human Services, listed in Section VI(a). (f) Other Miscellaneous State Labor Laws. Other New Hampshire labor laws you need to be aware of, as an employer, include the following: (1) Wage payments to terminated employees. Whenever an employer discharges an employee, the employer must pay the employee's wages in full within 72 hours. Whenever an employee quits or resigns, you must pay the employee's wages no later than the next regular payday, either through the regular pay channels or by mail if requested by the employee, except that if the employee gives you at least one pay period's advance notice of intention to quit, you must pay the final wages within 72 hours of his or her quit date. (2) Right-to-work laws. About half the states have enacted "right-to-work" laws, which guarantee that no person may be denied employment for refusing to join a union or for not paying union dues, thus banning either "union shop" or "agency shop" agreements, or both. In a union shop, an employee not belonging to a union may be hired but then must join the union, usually within 30 days. In an agency shop, an employee need not join the union but, to remain employed, must pay union dues. New Hampshire does not have such a right-to-work law and thus allows union shop or agency shop contracts between an employer and a union. (3) State anti-discrimination laws. In addition to complying with federal anti-discrimination laws, employers must also be aware of and comply with state civil rights laws in New Hampshire, and display a poster informing employees of their rights. You can obtain this poster from the Concord office of the New Hampshire Commission for Human Rights, at the address listed in Section VI(a). Note that New Hampshire law prohibits any discrimination in employment, based on age, gender, ethnicity, marital status, physical or mental disability, religion or national origin. (4) Reporting new hires. Under federal welfare reform laws, employers in all states are now required to report newly-hired (or rehired) employees to a designated state agency (the Department of Employment Security for New Hampshire employers) within 20 days after the date of hire. See the contact information for New Hires Reporting in
Section VI(a).
VI. STATE SOURCES OF HELP AND INFORMATION (a) Key State Agencies Contact Information. Unlike many other states, New Hampshire does not have a single agency to whom you can go to handle all your licensing and permitting requirements for your business under the laws of New Hampshire. Accordingly, you will need to contact the various New Hampshire government agencies that are mentioned in this book or listed below on an individual basis, to obtain needed forms, official posters, information, and other assistance from each such agency. A list of addresses and other contact information for such key agencies is set forth below for your convenience. BUSINESS STARTUP INFORMATION. A key agency that can provide helpful information on getting your business up and running in New Hampshire is:
SECRETARY OF STATE. Contact the office of the New Hampshire Secretary of State, Corporations Division, for information on:
STATE LABOR LAWS. Contact the following agency about your obligations as an employer under various state labor laws, including:
STATE SALES TAX. There is no general sales tax in New Hampshire. However, to register for an Operator's License for the sales tax on meals and room occupancy, if you operate a restaurant or rent transient accommodations (such as hotel or motel rooms), obtain your license or and information on the New Hampshire meals and room occupancy tax law, from the Department of Revenue Administration, at the address listed above for that agency. EMPLOYER WITHHOLDING. As there is no general individual income tax on wages in New Hampshire, there is no state income tax withholding requirement. STATE UNEMPLOYMENT TAX. Contact the following state agency to determine whether you are an employer subject to payment of state unemployment taxes, and for registration as an employer if you are subject.
NEW HIRES REPORTING. Report all newly hired employees to the New Hampshire Department of Employment Security (NHDES) within 20 days of hiring, either by mail or fax. You can call NHDES to request their reporting form. Send your reports to:
STATE OSHA PROGRAM. There is no state OSHA program in New Hampshire. The federal government provides federal OSHA enforcement instead. For required posters and information on federal occupational safety and health laws that affect you as an employer in New Hampshire, contact:
STATE ANTI-DISCRIMINATION LAWS. Contact the following state agency for more detailed information on New Hampshire civil rights laws that may apply to your business, and to obtain anti-discrimination notices you are required to post in the workplace:
(b) Small Business Development Centers. A number of Small Business Development Centers (SBDCs) are located throughout New Hampshire to assist you. These centers, usually located on college campuses, provide a wealth of start-up information and sponsor frequent business-oriented seminars. Contact the lead office below for information, or for the location of other SBDCs nearer to you.
(c) Internet Sites. If you have access to the Internet, there is a wealth of state and even local business information provided by state and local governments. All states now have a state government Web page, and most major state agencies also have sites on the Internet where you can obtain useful small business information on matters such as state taxes, financing sources, or the addresses and phone numbers (or e-mail addresses) of various state and federal agencies' offices in New Hampshire. Since new sites are appearing constantly, you might also want to search for other New Hampshire government Web sites by using one of the popular Internet search engines, such as Excite! or Yahoo. To start your Internet search for New Hampshire government information, you may want to begin with the following Internet sites: State of New Hampshire home page: Web listing of New Hampshire state agencies: Department of Revenue Administration (tax forms and information): New Hampshire Secretary of State, Corporations Division (filings, forms and fee information for corporations, partnerships, and limited liability companies, and trade name registration): Office of Business and Industrial Development (part of the New Hampshire Department of Resources and Economic Development): Department of Employment Security (unemployment taxes): New Hire Reporting (Department of Employment Security): New Hampshire Department of Labor (minimum wage, workers' compensation, annual safety reporting for employers):(d) Financing Sources. For information and help on locating financing for your small business, contact the nearest U.S. Small Business Administration office in New Hampshire, or contact the following state agency:
The address of the main SBA Office in New Hampshire is:
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Copyright © 2004 Michael D. Jenkins
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