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New Hampshire can be a wonderful place to start a business. No income tax, no sales tax, straightforward licensing requirements… what’s not to love?
The benefits of doing business in New Hampshire certainly don’t end with tax or licensing policies. Access to funding is another key advantage, as is the passionate and highly educated workforce.
U.S. News & World Report consistently ranks New Hampshire as one of the top states in the Opportunity category. The takeaway? Despite its small size, New Hampshire is a clear powerhouse.
This can be an amazing place to launch an LLC — but it’s important to understand what the process looks like and what it will take to achieve maximum protection from personal liability.
We cover all this and more in our guide on how start an LLC New Hampshire. You’ll come away appreciating all that New Hampshire has to offer for aspiring LLC members — and feeling more confident in the future of your business.
While there are many types of business entities worth launching in New Hampshire, the limited liability company (LLC) offers several compelling benefits. It’s a wonderful middle-ground option for those who require protection from personal liability but are ill-suited to running S corps or C corps.
Under this approach, modest filing and maintenance efforts can safeguard the personal assets of LLC members. With a sole proprietorship or general partnership, debt-ridden owners might be vulnerable to losing funds in personal bank accounts — or even their homes. LLCs are far safer for risk-averse business leaders.
Another advantage worth considering? Business credibility. Many sole proprietors and general partners find that they command more respect among clients and customers upon achieving LLC status. This, alone, may make it worthwhile to form an LLC.
Let’s look at the six steps required to set up an LLC:
We’ll dive in each step in further detail.
You may already have a name in mind for your New Hampshire LLC, but you’ll need to take several extra steps to confirm that this title is actually available — and that it’s worth using.
The New Hampshire Revised Statutes Annotated (RSA) states in Section 304-C:32 that all LLC names must contain the phrase “limited liability company” or abbreviations such as “LLC” or “L.L.C.” If you open a professional LLC, your business name must include “professional limited liability company” or abbreviations such as “PLLC” or “P.L.L.C.”
In addition to using the right LLC label, your organization’s name may need to obtain special approval if it contains terms such as:
Your LLC’s name must be distinguishable from the names of other local businesses. To qualify as distinguishable, the name should be substantively different from those affiliated with other organizations.
If similar names have been reserved or registered with the New Hampshire Secretary of State, you may need to come up with a new name.
Examples of factors that prevent LLC names from being deemed “distinguishable” include:
To determine whether a given name is available, call the New Hampshire Department of State’s information line at 603-271-3246 or email the Corporation Division at [email protected] While availability checks aren’t guaranteed to uncover similar names, this should still provide much-needed peace of mind.
The New Hampshire Department of State provides a specific form known as the Application for Reservation of Name. This document should be submitted alongside a $15 filing fee. The application will include details such as the type of entity, the nature of the business, and basic contact information for the applicant.
Often referred to as a “trade name,” a “Doing Business as” (DBA) name makes it possible for your business to operate under a moniker that is separate from its legal name.
The State of New Hampshire provides an Application for Registration of Trade Name, which should be submitted alongside a $50 filing fee. This application should reference the name of the business and the date it was organized, as well as basic information about the type of business that will be conducted.
Do you want exclusive rights to use your organization’s name for business purposes? If so, you’ll need to trademark it. This process can take place at both the federal and state level. Either solution can provide a valuable degree of protection for your brand.
Federal registration is available via the U.S. Patent and Trademark Office (USPTO), but there’s a lot to be said for using local solutions to safeguard your brand. Federally-registered trademarks tend to be more difficult, expensive, and time-consuming to obtain, so it’s worth your while to start with a New Hampshire trademark. The application can be completed online. Be prepared to submit a $50 application fee, along with a $2 convenience fee.
The document known as the “Articles of Organization” in most states is officially referred to as the “Certificate of Formation” in New Hampshire. While many of the documents referenced in this guide are optional, the certificate of formation must be filed in order to launch your LLC.
When seeking your certification of formation, you’ll need to provide information about your LLC and your business intentions, as referenced in RSA Section Section 304-C:31:
Once complete, your application (known as Form LLC-1) can be mailed to the New Hampshire Department of State’s Corporation Division. Be sure to include the filing fee of $100, with checks payable to the State of New Hampshire
If you plan to open a professional LLC (PLLC), you’ll complete a similar, but separate, form known as the certificate of formation for a Professional LLC. Should you later amend the initial provisions of the Certificate of Formation, you’ll need to file Form LLC-6 — the Restated Certificate of Formation.
As mentioned above, your LLC’s certificate of formation must reference a registered agent. This individual or company serves as a primary form of contact for — and is able to accept service of process on behalf of — your business. This is a legal requirement for operating a New Hampshire LLC, so you’ll want to designate a registered agent as soon as possible.
Eligibility standards for New Hampshire registered agents are straightforward. These individuals or businesses must have street addresses within the state of New Hampshire. P.O. boxes do not qualify.
Additionally, availability during ordinary business hours must be established, as your registered agent may be required to receive service of process at that time.
LLC members are permitted to serve as New Hampshire registered agents, as are their friends and family members. It’s common, however, for LLC members to work with commercial registered agents. These provide additional privacy and may be more reliable for business communication.
It’s possible to change registered agents after they have been established. Simply file Form 10: the Statement of Change of Registered Office or Registered Agent. This should be accompanied by a $15 filing fee, which will be waived if this information is submitted with the Annual Report.
The operating agreement should not be confused with your LLC’s certificate of formation. Both are important, but they serve decidedly different functions.
An operating agreement brings structure to your LLC. Serving as the blueprint for your enterprise’s functional and financial pursuits, this document outlines basic information (such as your legal LLC’s name, DBA, and registered agent) before diving into specifics about how your business will be run.
Operating agreements can look dramatically different from one business to the next, with their structure and details largely determined based on the needs and preferences of the LLC members. There may be some crossover with information detailed in the certificate of formation.
Key categories covered in a typical operating agreement include:
As in most states, there is no New Hampshire mandate specifically stating that local LLCs must draft operating agreements. That said, this document remains highly valuable for many types of New Hampshire businesses. It is a key tool for protecting your limited liability status, as it clearly demonstrates that your LLC is a separate entity. Furthermore, many financial institutions prefer to lend to LLCs that submit operating agreements.
An Employment Identification Number (EIN) is, in all likelihood, non-negotiable for launching your business in New Hampshire. This nine-digit number is issued by the IRS for tax purposes. Think of it as a Social Security number dedicated exclusively to businesses.
The EIN is an outright requirement for many types of entities, such as businesses with employees and multi-member LLCs.
Thankfully, the application process is straightforward. The IRS provides an online application with detailed instructions. This process must be completed within a single session. An EIN Assistant will guide you every step of the way.
To begin the online application process, clearly indicate that you intend to start an LLC. From there, you can explain how many members the LLC will have. Use the drop-down menu to select “New Hampshire” when prompted to indicate where the LLC will be physically located.
If asked why your LLC needs an EIN, you’ll likely select the option “started a new business.” If relevant, however, you can also indicate that you require an EIN because you intend to hire employees or want to change the type of organization you run (for example, from a general partnership to an LLC).
Next, enter personal information and the physical address for your LLC. Add the legal name of the LLC and the DBA, if relevant. Finally, you’ll need to answer a series of questions referencing specific situations such as your LLC’s involvement with gambling, alcohol sales, or the intended use of W-2s for employees.
At first glance, New Hampshire taxation may seem simple. There are no state income or sales taxes, after all. That said, your LLC may still be subject to several types of taxes, which can be difficult to navigate.
Determine early on how you’ll comply with these requirements and whether you’ll need to make special arrangements based on your business plans. Don’t hesitate to work with a tax professional to clarify what you’ll owe.
From sales taxes to payroll taxes and even local fees, a variety of taxes will impact everyday business for your LLC. Some of these must be paid directly by your business, while others will simply be collected on behalf of your employees. Tax arrangements can vary dramatically from one LLC to the next, so it’s important to examine your obligations thoroughly.
Keep in mind that, for tax purposes, an LLC is not classified as a distinct entity. This means that, in most situations, the IRS will not tax an LLC directly. Rather, the business functions as a pass-through entity, in which members determine how they prefer to be taxed. In many cases, this will take the form of taxation via personal returns. We will cover these arrangements in detail below.
If you’re not sure which tax solutions are most desirable, seek guidance from a professional. Accountants or tax lawyers can provide customized support to ensure that you’re fully compliant with all local, state, and federal tax requirements. They can also help you better understand the specific tax benefits you might get setting up the LLC for your specific needs and goals.
Whether you handle taxes on your own or with assistance from an expert, you can expect to encounter the following obligations:
In New Hampshire, no income tax is placed on wages or salaries. That doesn’t mean that you’re free from this financial burden. Instead of taxing income from residents’ wages, New Hampshire applies a 5 percent tax to income from interest and dividends.
Perhaps more relevant to your LLC’s tax concerns is the local Business Profits Tax (BPT). This involves income related to business activity within the state of New Hampshire.
The state’s official BPT rate has varied significantly over time, so it’s important to keep close tabs on adjustments. The rate was recently reduced to 7.6 percent. This applies to all taxable periods ending on or after December 31st, 2022. For most businesses, the BPT is handled via estimated payments. These must be made on a quarterly basis.
The BPT is a strict requirement for many — but not all — New Hampshire businesses. As of December 31st, 2022, only businesses earning over $92,000 in gross business income will be subject to the BPT.
One of the greatest financial benefits of living in — or running a business in — New Hampshire? The lack of a sales tax.
New Hampshire is one of just a few states to avoid taxing locally purchased goods. The state maintains excise taxes on certain types of products and services, however. These include:
These and other tax arrangements are clearly outlined in RSA Title V, which is exclusively dedicated to taxation. Depending on your industry and business functions, it’s possible that your LLC will be impacted by these special taxes — so do your homework before you get too excited about the general lack of a state sales tax.
Self-employment taxes cover obligations such as Social Security and Medicare. Traditional workers can rely on their employers to handle all this — but LLC members are responsible for paying their fair share based on profits and losses. Self-employment tax liabilities can easily be verified via Schedule SE.
Typically, the self-employment tax totals 15.3 percent of relevant income. This encompasses a 12.4 percent tax for Social Security, as well as 2.9 percent for Medicare. Further Medicare taxes may be required if LLC members exceed a threshold of $250,000 in annual earnings when filing jointly.
Do you plan to hire employees? If so, your LLC’s tax obligations won’t end with the self-employment requirements highlighted above. From Social Security to Medicare and even unemployment, you’ll also need to withhold payroll taxes on behalf of all LLC employees.
Be prepared to file IRS Forms 940 to report the Federal Unemployment Tax Act (FUTA) tax, as well as Form 941 for reporting Social Security taxes, Medicare taxes, and income taxes.
The IRS maintains a pay-as-you-go approach, so filing and deposits will occur on separate schedules. Later, we’ll explain how the right bookkeeping setup can play into these requirements.
Your tax arrangements may seem favorable in New Hampshire, but remember: If you run a multi-state business, you may also owe taxes in other states.
Many local governments have initiated economic nexus laws, which require some sellers to collect applicable state taxes even if they lack physical locations in a given state. Therein lies the value of working with a professional, who can help you better understand your comprehensive tax obligations.
Completing your certificate of formation and operating agreement are important first steps, but this is only the beginning. Get ready for an in-depth process that encompasses several strategic choices early on, plus a long-term commitment to responsible bookkeeping.
How you proceed will determine the level of protection you enjoy later on. Remember: The goal is to shield LLC members from personal liability. Take these extra steps to ensure that your LLC accomplishes this crucial objective.
You’ve worked hard to establish liability protection for your business. Should you blur the lines between personal and business expenses, however, that protection may no longer be available.
Known as “piercing the corporate veil,” this problem can leave you at considerable risk. A business bank account provides one of your best lines of defense. It demonstrates clear difference between how you spend your money as an individual versus how you handle LLC finances.
Opening a business bank account can be surprisingly easy. Be prepared to submit your operating agreement or EIN for verification of your business status. Strategic selection is also important, as not all business accounts are equally valuable for all LLCs. Think carefully about concerns such as opening deposits and overdraft protection.
In addition to paying $100 when you complete your certificate of formation, you’ll need to pay extra fees each year to keep your LLC current. Known as an LLC annual report, the official document for keeping your LLC current can be easily completed online via the One Click portal.
The fee for the annual report is $100 per year. This may seem steep, but remember: If changes such as a registered agent designation form are made via this report, other filing fees may be waived.
Detailed bookkeeping is important for all types of businesses, but it makes an especially compelling difference for New Hampshire LLCs. If you’re determined to avoid piercing the corporate veil, utilize a detail-oriented bookkeeping system that prevents the commingling of personal and business assets. Effective bookkeeping is also essential for tax purposes, as it will streamline otherwise time-consuming filings and verification processes.
Depending on your budget and personal preferences, you may choose to handle bookkeeping in-house — or you may outsource this to an expert. Neither solution is preferable in every situation. Often, however, business leaders find it beneficial to leave the complications of bookkeeping to professionals, who are better equipped to navigate tax or accounting complications. This frees entrepreneurs up to dedicate their valuable time to other business matters.
While New Hampshire does not maintain general statewide business licensing requirements, many LLCs must obtain special permits. These are explained in detail on the website for the New Hampshire Office of Professional Licensure and Certification (OPLC). Representing several dozen licensed professions, the OPLC should be a go-to resource as you get your business established.
Many license applications can easily be completed online. Visit the Find a Board page to search for specific licensing requirements by profession. Common examples of industries requiring specialized licenses include:
Additional licenses are required for businesses that manufacture, distribute, or serve alcohol. This is handled under the New Hampshire Liquor Commission. These licenses are classified based on where and in what capacity alcohol is distributed. Examples of licenses include:
Additional details about licensing can be found in the resource Licensed, Certified, and Registered Occupations in New Hampshire. This offers valuable insight into “occupational licenses, certifications, or registrations issued by state boards, commissions, and departments.” The state of New Hampshire also provides a useful online service for license applications and renewals.
This portion of our website is for informational purposes only. Tailor Brands is not a law firm, and none of the information on this website constitutes or is intended to convey legal advice. All statements, opinions, recommendations, and conclusions are solely the expression of the author and provided on an as-is basis. Accordingly, Tailor Brands is not responsible for the information and/or its accuracy or completeness.