Q:

Subject: corp!

 

HI

I would like to know how easy it is to incorp in a

different state than where you live! I came across

your website and found it to be very informing,and

found that I should be asking alot more questions to

someone that really knows what they are talking about

before I incorporate my business.I also believe that

getting any good advice will benefit us ,even if it is

being directed to ask the important questions with

another proffessional.And thats another question what

do you really need to ask ?

I /we have a development company -Construction in

California

and we are starting a consaulting company >which would

consault our clients in working with all general

contractors ,interior designers etc!

This was our idea to relieve our personal tax burdens.

We would hire our own development company along with

other needed companies through our corporation trying

of course to keep the main funds in the corp,and not

into our personal .Our development company is a sole

prop.

So if you have a better suggestion I would love to

here it! I just dont want to make the wrong choices

and end up over my head ,or in trouble. I was told to

open up an s corp.Simply because you can use funds

from your s corp and your personal ,or sole prop

buisness as long as you keep your papers in very good

order. This is easier because you can move thing

around to meet your needs. What do you think about

that! I have been told so many different things I

really dont know what to believe.

A:

This is the exact kind of issue that you should be discussing directly with an experienced professional tax advisor.

Anyone can set up a corporation in any state.  You just need to have someone residing in that state who can act as your corp's registered representative.  There are dozens of companies that provide such services, especially in states with no income tax, such as Nevada.

The really tricky issue will have to do with where the corp earns its money and conducts its operations.  If any business activity happens inside the California borders, regardless of where the corp is chartered, you will have to file a Calif. corp income tax return and pay at least the $800 minimum corp tax each year. 

If, on the other hand, all business activity happens outside of the Calif. borders, no Calif corp tax return would be required.

Proper sourcing of income in various sates is a tricky thing to handle, and an area where you most definitely need to be working with an experienced tax pro.  The California Franchise Tax Board is the most aggressive tax agency in the country at tracking down and nailing anyone they suspect of failing to pay every last bit of required taxes.  

Even if all of your business activities are conducted inside Calif, there are still plenty of tax savings opportunities by setting up a corp.  Any good tax pro should be able to help you develop the best strategy for your unique circumstances.

Good luck.

Kerry Kerstetter

 

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 6/07/2006 09:54:00 AM Send this post: