Iowa Small Business Tax Laws
Posted by Molly
The state of Iowa, as I understand it, encourages the presence of small businesses. In fact, I was reading that over 50 percent of the businesses in Iowa have 5 or less employees. So if you are thinking of starting a business, you’ll be in good company. One of the things you will want to know about is the Iowa small business tax laws.
The state allows quite a few income tax deductions and credits for people who perform certain activities in their business. For example, if you hire an ex-offender or a person who has a disability, you can get a deduction. There are credits for creating new jobs and assistive devices, as well as a property rehabilitation tax credit. There is an investment tax credit and a franchise credit.
If you are in the field of research and development, you will be happy to know that there is a research activities tax credit. Iowa tax law also allows deductions for seed capital and capital gains. Farmers can enjoy a tax exemption for the purchase of machinery and equipment, if it is used in agricultural production; those who raise cattle can get a cow-calf beef operation refund.
Anyone who sells goods and services in Iowa must apply for a tax permit. Even if you are sponsoring a one-time event, you have to obtain a permit; if you are inviting vendors to sell goods at the event, they must give you their permit number. If they do not collect sales tax, you could ultimately be responsible for collecting it.
If you are an Iowa contractor, you can apply for a special permit exempting you from sales tax on the purchase of your building materials or supplies. This law took effect on July 1 2003, and it applies if you are a contractor/retailer, but if you are selling the supplies to an owner (one whom you are building a house for) you must charge sales tax.
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