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Your type of business affects your tax rate

On Behalf of | Sep 9, 2015 | Tax Law

Many states use tax rates and other tax treatment as a means of luring businesses to the state and retaining those in the state. Ohio is no different, and the discussion out of the legislature every year always includes heated debates regarding how to change taxes to make Ohio more attractive to all types of business, to improve the overall economic condition of the state.

That is all well and good, but your business is unlikely to fall under an “all types of business” definition. Your business is a retail store, a farm implement dealer, a coffee shop, performs payrolls processing or provides custom CNC machine work. Or any one of the thousands of other business enterprises within Ohio.

And it turns out that the type and location of your business affect the tax you pay. When the business promotion studies report that businesses pay a certain percentage of tax in Ohio, they usually refer to aggregate numbers.

You don’t pay your taxes in the aggregate, you pay them in the particular and that is why it is important to speak with a tax attorney when you need information concerning your taxes and how changes to your business could affect the rate and amount you pay.

A recent study by an accounting firm found the variations in business tax rates in Ohio are substantial. If you operate a distribution center, your tax rate is 27.6 percent, as compared to a “capital-intensive manufacturer” which is only taxed at a 5.1 percent rate.

It is always important to note that because the legislature may change these rates at will, what was correct last year may not be valid this year or next, so you need to keep apprised of these changes.

Source:, “Firm analyzes Ohio’s biz tax rates,” September 1, 2015