What Is a Business Tax Receipt?
A business tax receipts – also known as gross receipts – are sales of a business that form the basis for taxation in a few states and certain local tax authorities. The components of business tax receipts vary by state and municipality.
Some business tax receipts include income to a business from all sources without any deductions. Unlike gross sales, business tax receipts encompass anything that is not related to the normal business activity of an entity like tax refunds, donations, interest and dividend income and others. Some states and local tax jurisdiction impose taxes on business tax receipts instead of corporate income tax or sales tax.
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NOTE: FreshBooks Support team members are not certified income tax or accounting professionals and cannot provide advice in these areas, outside of supporting questions about FreshBooks. If you need income tax advice please contact an accountant in your area.
Examples of Business Tax Receipts
Texas Tax Code Section 171.103 defines gross receipts (business taxt receipts) for a business as the sum of:
1) each sale of tangible personal property if the property is delivered or shipped to a buyer in this state regardless of the FOB point or another condition of the sale
2) each service performed in this state, except that receipts derived from servicing loans secured by real property are in this state if the real property is located in this state
3) each rental of property situated in this state
4) the use of patent, copyright, trademark, franchise or license in this state
5) each sale of property located in this state, including royalties from oil, gas or other mineral interests
6) other business done in this state.
Ohio Revised Code Section 5751.01 defines gross receipts (business tax receipts) for the purposes of Commercial Activity Tax (“CAT”) as “the total amount realized by a person, without deduction for the cost of goods sold or other expenses incurred, that contributes to the production of gross income of the person, including the fair market value of any property and any services received, and any debt transferred or forgiven as consideration.”
Since 1875 the City of Orlando has issued licenses to those businesses, professions or occupations that have locations or branch offices within their jurisdiction. The Business Tax Receipt is proof of payment of the business tax and is required before a business opens. A business operating without a business tax receipt (gross receipts) is subject to a penalty.
Business tax receipts or gross receipts are given by state and municipal tax authorities that use them as a taxation basis for businesses.