Business Law Law in New Hampshire: Overview
New Hampshire offers a distinctive business environment characterized by the absence of a general sales tax and no broad-based personal income tax on wages, making it appealing for both businesses and employees. The state imposes a Business Profits Tax (BPT) on business income and a Business Enterprise Tax (BET) on the enterprise value tax base. LLCs are formed by filing a Certificate of Formation with the New Hampshire Secretary of State, and corporations file Articles of Incorporation. New Hampshire enforces non-compete agreements under common law principles, applying a reasonableness standard. The state is an at-will employment state with protections under the New Hampshire Law Against Discrimination. Workers' compensation is mandatory for all employers. New Hampshire's proximity to Boston and its favorable tax structure have made it a popular location for businesses seeking to reduce tax burdens while maintaining access to New England markets and talent.
Key Statutes & Deadlines
LLC Formation Filing Fee
$100 for Certificate of Formation; $100 annual report fee
N.H. Rev. Stat. Ann. § 304-C:11
Business Profits Tax
7.5% on business profits apportioned to New Hampshire
N.H. Rev. Stat. Ann. § 77-A:2
Business Enterprise Tax
0.55% on the enterprise value tax base (compensation, interest, and dividends paid)
N.H. Rev. Stat. Ann. § 77-E:2
Workers' Compensation
Mandatory for all employers
N.H. Rev. Stat. Ann. § 281-A:5
Interest and Dividends Tax
Being phased out; applies to interest and dividend income for individuals only
N.H. Rev. Stat. Ann. § 77:1
Business Profits Tax and Business Enterprise Tax
New Hampshire's business tax structure consists of two complementary taxes: the Business Profits Tax (BPT) and the Business Enterprise Tax (BET). The BPT applies at 7.5% on taxable business profits, which is essentially net income apportioned to New Hampshire for businesses operating in multiple states. The BET applies at 0.55% on the enterprise value tax base, which includes total compensation, interest paid, and dividends paid by the business. The BET functions as a minimum tax on businesses that may have low profits but significant payroll and other enterprise activity in the state. Crucially, BET payments can be credited against BPT liability, so businesses generally pay the greater of the two taxes, not both in full. The state has been incrementally reducing both rates in recent years. New Hampshire uses a three-factor apportionment formula considering sales, payroll, and property for multi-state businesses. There is no separate franchise tax. The absence of a general sales tax and broad-based personal income tax on wages creates a competitive advantage for businesses, though the BPT rate is higher than many states' corporate income tax rates.
Non-Compete Enforcement Under Common Law
New Hampshire enforces non-compete agreements under common law principles, evaluating whether the restriction is reasonable and necessary to protect a legitimate employer interest. Courts consider the duration, geographic scope, and scope of restricted activities. New Hampshire courts have upheld non-competes with durations of one to two years and geographic restrictions that are proportional to the employer's business territory. The New Hampshire Supreme Court has emphasized that non-competes must not be broader than necessary to protect the employer's legitimate interests, which include trade secrets, confidential information, and customer goodwill. Courts may apply the blue-pencil doctrine to sever or narrow unreasonable provisions if the agreement is divisible. New Hampshire requires that non-competes be supported by adequate consideration, with initial employment sufficing for new hires and independent consideration required for existing employees. The state legislature has considered, but not enacted, specific non-compete reform legislation. New Hampshire courts tend to favor enforcement when the agreement is narrowly tailored and genuinely protects proprietary interests rather than merely limiting competition.
New Hampshire Court System
New Hampshire business disputes are heard in the Superior Court, which serves as the state's general jurisdiction trial court across 10 counties. The Superior Court handles all business litigation including breach of contract, corporate governance, trade secret, and non-compete enforcement claims. The Circuit Court Division handles smaller civil matters up to $25,000 through its District Division. New Hampshire does not have a specialized business court, but the relatively small size of the state's judiciary means that judges in the larger counties (Hillsborough, Rockingham, and Merrimack) regularly handle complex commercial matters. Appeals proceed directly to the New Hampshire Supreme Court, as the state does not have an intermediate appellate court. This direct appellate path means business law decisions receive prompt Supreme Court review, fostering clear and consistent legal standards.
Damages & Penalties
New Hampshire business litigation remedies include compensatory damages for breach of contract claims, encompassing expectation damages, consequential damages, and in appropriate cases, specific performance. The New Hampshire Trade Secrets Act provides for injunctive relief, actual damages including unjust enrichment, and exemplary damages up to twice actual damages for willful and malicious misappropriation, plus attorney fees. Non-compete violations are addressed through injunctive relief, with courts requiring a showing of likelihood of success on the merits and irreparable harm. New Hampshire follows the American rule on attorney fees, with each party bearing its own costs unless a statute or contract provides otherwise. The state does not have a statutory cap on punitive damages, but courts require proof of malice, wantonness, or oppression. Consumer protection violations under RSA 358-A may yield actual damages, treble damages for willful or knowing violations, and attorney fees. Workers' compensation fraud carries criminal penalties.
Recent Legislative Changes
New Hampshire has been incrementally reducing the Business Profits Tax and Business Enterprise Tax rates to maintain competitiveness. The state is phasing out its Interest and Dividends Tax, which applied to individuals receiving interest and dividend income. Business formation and reporting processes have been modernized through the Secretary of State's online portal. New Hampshire has enacted data breach notification requirements and updated its consumer protection statutes. The state has also expanded workforce development initiatives targeting the technology and advanced manufacturing sectors.
Key Takeaways
- New Hampshire has no general sales tax and no broad-based personal income tax on wages.
- The Business Profits Tax of 7.5% and Business Enterprise Tax of 0.55% form the primary business tax structure, with BET credits against BPT.
- LLC formation costs $100, with a $100 annual report fee.
- Non-competes are enforced under common law reasonableness standards with blue-pencil reformation available.
- New Hampshire is an at-will employment state with protections under the Law Against Discrimination.
- Workers' compensation is mandatory for all employers.
- Appeals go directly to the New Hampshire Supreme Court with no intermediate appellate court.
Frequently Asked Questions
Does New Hampshire have a corporate income tax?
New Hampshire imposes a Business Profits Tax of 7.5% on business profits and a Business Enterprise Tax of 0.55% on the enterprise value tax base. BET payments are credited against BPT liability, so businesses generally pay the higher of the two, not both in full.
How much does it cost to form an LLC in New Hampshire?
Filing a Certificate of Formation with the New Hampshire Secretary of State costs $100. The annual report fee is also $100, making ongoing maintenance costs moderate.
Does New Hampshire have a sales tax?
No, New Hampshire is one of five states that does not impose a general sales tax. This is a significant advantage for retail and consumer-facing businesses and makes the state attractive for residents and businesses relocating from higher-tax states.
Are non-competes enforceable in New Hampshire?
Yes, New Hampshire enforces non-compete agreements under common law reasonableness standards. Courts evaluate duration, geographic scope, and activity restrictions, and may blue-pencil overbroad terms. Non-competes are generally upheld when they are narrowly tailored to protect trade secrets or customer relationships.
What is the Business Enterprise Tax?
The BET is a 0.55% tax on the enterprise value tax base, calculated as total compensation paid, interest paid, and dividends paid by the business. It functions as a minimum business tax and can be credited against Business Profits Tax liability.
Is workers' compensation mandatory in New Hampshire?
Yes, New Hampshire requires workers' compensation coverage for all employers. Coverage can be obtained through private insurers, and self-insurance is available for qualifying employers. There is no state-operated insurance fund.
This guide is provided for general informational purposes only and does not constitute legal advice. New Hampshire laws may change, and the information here may not apply to your specific situation. For advice tailored to your circumstances, consult with a qualified New Hampshire attorney.