How to Incorporate in New Hampshire vs.
How to Start a New Hampshire LLC
A Guide to Choosing the Best Business Entity in New Hampshire
Are you ready to start a business in New Hampshire? Are you facing the major decision of which business entity type is best for you? You’ve probably heard the Limited Liability Company (LLC) and corporate entities are the most popular options in the country. The LLC and corporation have the most desirable elements of all the business entities, such as limited liability protection and flexible tax structuring options. This New Hampshire guide on LLC formation and incorporation will explore each of these entities specific to the state of New Hampshire and what they have to offer for your business. We’ll go over the details of starting a New Hampshire LLC and a New Hampshire corporation, what to expect with their annual maintenance, and the advantages and disadvantages of each entity.
Once you decided which business structure best meets your needs, you can hire Active Filings and have our professionals streamline your incorporation process. We’re confident you’ll see in no time why Active Filings is America’s most reliable business incorporation service.
Hire us to form your LLC or Corporation in New Hampshire!
LLCs vs. Corporations
Knowing the main characteristics true of all LLCs and corporations will help you begin making your decision:
- Maintenance
With a corporation, you can expect a high level of maintenance, both on a day-to-day and annual basis. Corporations have more formalities than an LLC, like electing a board of directors, holding shareholder meetings, and maintaining internal records such as meeting minutes and stock issuance. On the flip side, you can expect a minimal amount of maintenance if you form an LLC. LLCs will need only minimal paperwork, have flexibility when a decision is needed, and have low annual upkeep. An LLC is the best choice if you have a small to medium-sized business and can only handle a low amount of maintenance. - Tax Structure
An LLC is the simpler and less expensive option in terms of time and paperwork for business owners during tax season, since an LLC is not a separate taxable entity from its owners. LLCs are pass-through tax entities, where income and losses pass through the business and onto the members to report on their personal income tax return. Corporations are more advanced for a business owner to take care of during tax season. A standard corporation defaults to a tax structure called a C corporation, and is known for what’s called double taxation, where a business’s net income is taxed initially by a corporate tax, and then taxed again on personal income, after shareholders receive their profits (dividends) and losses. C corporations are typically taxed at a lower rate on profits, and have opportunities for tax deductions such as health care and travel, and can retain its earnings to be reinvested into the company’s growth. A corporation can potentially elect an S corporation tax status if it’s more beneficial. When you elect an S corporation tax status, your corporation becomes a pass-through entity, and is allowed tax advantages such as dividends not subject to self-employment tax. - Investors
If you will be expanding your business with help mostly from investors, starting a corporation is the suitable choice. Investors are more comfortable investing their time and funds in a traditional business structure that offers stock, like a corporation. Investors don’t have to worry about complicating their personal taxes when they invest in a corporation, and only get taxed on profits actually distributed to them. Investors view corporations as a dependable business structure that will provide them with a return on their investment. Having a corporate structure will profoundly impact the ability to raise investment money. On the other hand, investors can still invest in an LLC by owning a percentage of that LLC. Owners of LLCs will have to pay taxes on their distributive shares, even if they haven’t received a distribution on those profits, and can’t issue stock, which is a turn-off for many investors. Consider a corporation if you plan to grow your business big. - Prestigious Title
A business starts with its appearance, and having the “LLC” or “Inc” ending on your business name will give it a level of prestige. These endings convey permanence and encourage trust from potential investors or clients, and show that you are serious about your business. While both entities provide a level of prestige, incorporating provides a higher level of prestige for your business, since the corporation is the oldest and most traditional entity type. Keep in mind the LLC has surpassed corporations in popularity in most states, and the prestige of an LLC is continuing to grow.
Note that whether you form an LLC or a corporation, you’ll need to file a Beneficial Ownership Information (BOI) Report with the Financial Crimes Enforcement Network (FinCEN) once your company is officially formed with the state of New Hampshire. This report provides the federal government with identifying information about your company and those with the most control over profits and business operations. However, unlike state filings, the information shared in your report does not go on the public record and there is no filing fee. (Though if you don’t want to file this on your own, we offer BOI filing service for just $9.)
NH LLCs vs. NH Corporations
Now that we’ve explored the main characteristics that apply to all LLCs and corporations, next is to dig into more specific characteristics of what makes a New Hampshire LLC or New Hampshire corporation unique from other states, which will bring us to the final answer on which entity is best for your business. Each state has its own set of statutes and tax laws that govern the way its businesses operate, and these unique details must be considered when choosing your business entity. The information in this section will provide these specifics for the New Hampshire LLC and the New Hampshire corporation.
- New Hampshire Business Enterprise Tax
The New Hampshire business enterprise tax (BET) is a business tax on your company (enterprise) value tax base, which roughly translates to the tax on your total compensation paid out by your business, including dividends and interest.For taxable periods beginning on or after January 1, 2019, businesses with more than $217,000 of gross receipts from all their activities, or with total compensation paid out by your business over $108,000, are required to file a return. Currently, for taxable periods on or after December 31, 2019, the BET rate is .6%.Most states aren’t subjected to two different types of state taxes, but keep in mind the advantage that all the remaining income after the BPT and the BET that passes on to you personally won’t be subjected to further taxation on your personal state tax return.
- New Hampshire Business Profits Tax
The New Hampshire business profits tax (or BPT) is a tax imposed on a business’s income. Every company carrying on business activity in Nebraska that is organized for gain or profit with gross receipts over $50,000 must pay this tax. This tax is a flat rate that fluctuates.Currently, for taxable periods ending after December 31, 2019, the rate is 7.7%. This rate may significantly impact your business, depending on your anticipated income and business entity, and you may want to talk to a tax professional for more detail.
- New Hampshire Individual Income Taxes
A big advantage of doing business in New Hampshire is the absence of a personal net income tax. However, there is a 5% tax on interest and dividend income that should be taken into account when choosing your business entity. - New Hampshire Multi-member LLC Protection From Creditors
Multi-member LLCs in New Hampshire have a strong level of protection against creditors (a person who is owed funds or assets by a debtor). Creditors only have one remedy against the debtor of a multi-member LLC, which is a charging order that puts a lien on a debtor’s interest (funds and assets) and creditors then have a right to receive any distributions made to the debtor from the LLC, if the LLC makes a distribution. Often times, this leads to the creditor ending up with nothing, since creditors can’t order the LLC to make distributions (NH §304-C:126).
New Hampshire LLC or New Hampshire Corporation? Final Answer.
In order to make your decision on forming either a New Hampshire LLC or a New Hampshire corporation, consider the size of your business, priority of investors, level of maintenance you’ll need, and the most beneficial tax structure for the future of your business.
The New Hampshire LLC is best for you if you have a small to medium-sized business. LLCs in New Hampshire stay true to design in terms of simple formation and maintenance, simple management, strong flexibility in decision-making, and limited liability protection. If growing your company large with investors is not your top priorities, you’re looking for the least expensive and sophisticated taxes and annual maintenance, and needing limited liability protection for your business, the LLC is your answer.
The New Hampshire corporation is best for you if you plan to grow your business big with the funds from investors, and you have the means for the amount of maintenance required. A New Hampshire corporation remains true to character in its substantial amount of paperwork, higher maintenance, and involved yet beneficial tax structure.
How to Incorporate in NH
In order to form a corporation in New Hampshire, also known as incorporating, you’ll need to file the Articles of Incorporation with the New Hampshire Secretary of State. You can find this document online at the Secretary of State website. Once your Articles of Incorporation are approved, your corporation is officially formed.
You can file the Articles of Incorporation in the following ways:
- Online at the New Hampshire Secretary of State website (recommended)
- By postal mail
- In person at the Secretary of State office
The fee to file your New Hampshire Articles of Incorporation costs $100 ($102 if you file online). New Hampshire has fairly quick approval times at about two days (not counting mailing time if you choose to file that way).
To complete your New Hampshire Articles of Incorporation, include the following information:
Enter your corporation’s name exactly as you would like it to appear. Your corporation name must include one of the following words: “Incorporated,” “Corporation,” “Limited,” or an abbreviation of one of those words.
Your corporation name can’t imply it is organized for a purpose other than what is mentioned in the Articles of Incorporation. The name can’t already be in use, and can’t sound similar to the name of any other company in New Hampshire.
List the principal office address, business phone, and business email for your corporation. If choose not to fill out this information, the registered agent address will be used as the principal office address.
List the number of shares your corporation is authorized to issue (most corporations start out with around 1,500).
A registered agent is a person or entity in the state that receives service of process from the government on behalf of a business. A registered office is the registered agent’s business address where they can be found for in-hand service of process. Indicate the name of your registered agent and list their New Hampshire physical office address.
If you hire Active Filings to form your New Hampshire corporation, we’ll provide a year of registered agent service for no additional charge and track all required maintenance filings to keep your corporation active, as well as provide a bevy of free online tools in your online Active Filings account.
Describe the purpose for creating your corporation. The purpose doesn’t need to be specific, and is best left as a general statement. For example, a business that provides writing services would use a purpose statement such as “To provide writing services and to engage in any other lawful activity for which corporations may be incorporated in this state.”
In the blank space, write in “is” if you are forming a benefit corporation, or “is not” if you are not electing a benefit corporation. If you do plan on forming a benefit corporation, write in the fiscal year end date on the next line.
Enter the names, business addresses, and titles for all officers or directors. At least one person is required here.
Enter the names and business addresses for all incorporators. At least one incorporator is required here.
Have all incorporators sign and date here.
How to Start an LLC in NH
In order to form an LLC in New Hampshire, you’ll need to file the Certificate of Formation with the New Hampshire Secretary of State. You can find this document online at the Secretary of State website. Once your Certificate of Formation is approved, you officially have your LLC created.
You can file the Certificate of Formation in the following ways:
- Online at the New Hampshire Secretary of State website (recommended)
- By postal mail
- In person at the Secretary of State office
The fee to file your New Hampshire Certificate of Formation costs $100 ($102 if you file online). New Hampshire has fairly quick approval times at about two days (not counting mailing time if you choose to file that way).
To complete the New Hampshire Certificate of Formation, include the following information:
Enter your LLC name exactly as you would like it to appear. Your company name must include the words “Limited Liability Company,” ” “L.L.C.,” “L. L. C.,” or “LLC.”
Your company name can’t imply it is organized for a purpose other than what is mentioned in the Certificate of Formation. The name can’t already be in use, and can’t sound similar to the name of any other company in New Hampshire.
List the principal office address, business phone, and business email for your LLC. If choose not to fill out this information, the registered agent address will be used as the principal office address.
Describe the nature or purpose for creating your LLC. The purpose doesn’t need to be specific, and is best left as a general statement. For example, a business that provides writing services would use a purpose statement such as “To provide writing services and to engage in any other lawful activity for which LLCs may be organized in this state.”
If you know the NAICS Code and Sub Code, list those here. If you have no idea what those words mean, don’t worry—it is not required information.
A registered agent is a person or entity in the state that receives service of process from the government on behalf of a business. A registered office is the registered agent’s business address where they can be found for in-hand service of process.
Indicate the name of your registered agent and list their New Hampshire physical office address.
If you hire Active Filings to form your New Hampshire corporation, we’ll provide a year of registered agent service for no additional charge and track all required maintenance filings to keep your corporation active, as well as provide a bevy of free online tools in your online Active Filings account.
If all the members are owners and are involved in decision-making and day-to-day operations, the LLC is member-managed. If certain members are appointed as managers to make the decisions and run day-to-day operations, the LLC is manager-managed.
If your LLC is manager-managed, write “is” in the blank space. If your LLC is member-managed, write “is not” in the blank space.
Enter the names, business addresses, and titles for all managers and/or members you would like placed on the record. At least one person is required here.
Have all organizers sign and date here.
New Hampshire Annual Report
To keep your business in good standing and updated with the state of New Hampshire year after year, you’ll need to take care of a few maintenance tasks.
1. File your annual report
2. File your annual New Hampshire business taxes
In this section, we’ll walk you through the basic instructions and resources you’ll need to help you take care of your tax-related upkeep and annual maintenance.
What is a New Hampshire annual report?
New Hampshire LLCs and New Hampshire corporations are required to file annual reports with the New Hampshire Secretary of State. The report is meant to update or confirm the records for your business, and lets your business remain in good standing. You can update information such as business address, directors, officers, and managers using the annual report form.
How do I file an annual report in New Hampshire?
New Hampshire LLCs and corporations need to file their annual reports either online at the Secretary of State website, or by postal mail. Filing online is faster, more secure, and is the preferred method by the Secretary of State.
How much does it cost to file an annual report in New Hampshire?
New Hampshire LLCs and corporations will need to pay an annual report fee of $100 ($102 if filing online).
When are New Hampshire annual reports due?
Your New Hampshire LLC or corporation annual report is due between January 1st and April 1st every year. Your first annual report is due the year following the year your business was formed.
New Hampshire Business Taxes
Tax season for your business involves prior planning and complex paperwork, and you probably have a lot of questions. The filings can get complicated and you may need the help of a tax service or CPA to complete these requirements, but regardless of your accounting skills, we’re here to help get you started.
Take a look at our New Hampshire Business Tax FAQ below:
What is the New Hampshire business enterprise tax?
The New Hampshire business enterprise tax (BET) is a business tax on your company (enterprise) value tax base, which roughly translates to the total compensation paid out by your company, including dividends and interest.
Currently, for taxable periods ending after December 31, 2019, the rate is .60%.
Most states aren’t subjected to two different types of state taxes, but keep in mind the advantage that all the remaining income after the BET and business profits tax (described later in this section) that passes on to you personally won’t be subjected to further taxation on your personal state tax return.
Who has to pay the New Hampshire BET?
The BET must be paid by every for-profit or non-profit company engaging in business within New Hampshire that has total gross business receipts above $207,000 or a company value tax base greater than $103,000.
What is the New Hampshire business profits tax?
The New Hampshire business profits tax (or BPT) is a business tax imposed on a business’s income. This tax is a flat rate that fluctuates.
Currently, for taxable periods ending after December 31, 2019, the BPT rate is 7.7%. This rate may significantly impact your business, depending on your anticipated income and business entity, and you may want to talk to a tax professional for more detail.
Who has to pay the New Hampshire BPT?
Every company carrying on business activity in New Hampshire that is organized for gain or profit with gross receipts over $50,000 must pay this tax.
What is the New Hampshire individual income tax rate?
A big advantage of doing business in New Hampshire is the absence of a personal net income tax. However, there is a 5% tax on interest and dividend income that should be taken into account when choosing your business entity.
What forms do you file for your New Hampshire taxes?
New Hampshire corporations must file Form NH1041 for the BPT, as well as Form NH1120.
New Hampshire LLCs must file Form DP-10, as well as Form NH-1040 if the LLC member is an individual or Form NH-1065 if the LLC member is considered a partnership.
All New Hampshire businesses will need to file the Form BT-Summary if they are subject to the BPT and/or the BET.
When are my New Hampshire business tax returns due?
In New Hampshire, corporate income tax returns are due by the 15th day of the third month after the end of the tax year, or March 15th for calendar year filers. LLC tax returns are due by the 15th day of the 4th month after the end of the year, or April 15th for calendar year filers.