The Single Category Filing option exists for any taxpayer that has two or more fund classes (business activities) measured by gross receipts. If one of the fund classes represents 80% or more of the total of all gross receipts, then the taxpayer may choose to use the Single Category Filing option to simplify their reporting requirements by paying all the gross receipts under that single category.
It is important to remember that certain fund classes have a higher tax rate than others. For example, taxpayers who offer professional services and who principally sell their labor, generally have a higher tax rate than retail operations. If 80% or more of the total of all gross receipts falls in a higher tax rate, you may not want to consider the Single Category Filing as you will be
Example of When to Consider Single File
A hardware store that principally operates as a retailer of hardware goods (retail), but also offers ancillary services such as tool sharpening (professional service).
Example of When Not to Consider Single File
An auto mechanic who principally sells their labor (professional service), but who may also sell auto parts in limited volume (retail).
Single Category Filing is optional. If you elect to file under Single Category, but it is determined that 80% or more of your total gross receipts is not derived from your single category, you may be liable for back taxes under every tax classification your business is liable for.
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