My main question is whether it would be a good idea to move my S corporation based in Los Angeles, CA to the state of Washington, Texas or Nevada since they do not have a personal or corporate income tax? Do I need to hire a lawyer?
I currently have an S corporation that has been in California. My company does internet marketing based out of LA. I am thinking about moving myself and my company to either Texas, Washington or Nevada for tax savings. I know that those states do not impose a personal income tax or corporate income tax but they do have some form of franchise business tax, B&O tax or modified business tax.
Reading up on everything is very confusing, does anyone have a good resource for me on further research?
Corporate / Incorporation Lawyer
Hi there. The most efficient way to get up to date answers is by going directly to each state's Secretary of State websites. For Texas go to http://www.sos.state.tx.us/corp/index.shtml for the others just replace the tx with the NV or WA. If you're looking for tax benefits (avoiding double taxation) I would strongly suggest looking into LLC. They also provide more Liability Protection. Some states, however, have publication requirements that may be costly. So look up the requirements for each state in the said websites. Or hire an attorney that already knows this. I'm available for a consultation, if you have further questions email@example.com.
3 lawyers agree
You really should step back and look at all the parameters of being in business in a state, not just the taxes.
Moving to a state for tax purposes exclusively is the proverbial tail wagging the dog. It seems to me you need to do strategic planning first, which includes more than just a tax plan. The states you mention are all VERY different states. So speak with a business attorney and an accountant that can review ALL the parameters on relocating your internet marketing company in Los Angeles to Nevada, Washington or Texas.
You left out far too many factors in your question to give you an in depth answer. My law professor always used to say; "there is always a simple solution to a complex problem, and it is usually wrong". Best of luck.
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5 lawyers agree
Real Estate Attorney
In short, you need to hire a qualified asset protection attorney to help you decide on the best course of action for where to move your S corporation.
While it is easy to find taxation information on the web with respect to the various states where you are considering on moving your company, the more difficult question becomes whether moving is right for you.
Simply relocating your "principal office" or re-incorporating in a foreign state does NOT automatically help your company avoid tax liability in California. In some cases, even if you just make calls or otherwise direct the business of the foreign company from your home or office in California, the State of California will still expect your company to pay its share of tax. Multiple taxation obviously defeats your tax planning strategy.
Speak with an asset protection or corporate attorney before making the move!
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Tax treatment is not the only reason to have a corporation in Nevada or California, the two states I am licensed to practice in. There are many other factors that you should consider. You should consult with an attorney in the jurisdiction you want to move the company to and discuss your desires, goals, and what may be best for you.
This post is for general informational purposes only. No attempt is made to provide legal advice.
Mergers / Acquisitions Attorney
In Texas, there is a franchise tax which is usually 0.7 % to 1% of revenue (after deducting either COGS or employee wages). As mentioned by others, you need to consider other factors as well. However, there is a reason why many businesses are relocating to Texas- it is a very pro-business, anti-regulatory state.