How much extra tax do you need to pay?

StudyingAccounting · 02-01-06, 07:45 PM

If you form a company in Nevada or Delaware but operate in California (or New York?), you need to pay tax to two different states, right? How extra tax do you need to pay compared to forming the company in California (or New York)?

02-01-06, 08:22 PM

You wouldn't technically pay extra tax, but rather taxes to a different state.

Example:
Company A is based in Texas. Company A begins to do business in Louisiana. Company A must register as a foreign corporation in Louisiana. Any assets, payrolls, or profits made in Texas would still be taxed under Texas' laws and fees. Any of that made in Louisiana would be taxed under their laws and regulations.

There are exceptions to this, however it varies from state to state. For example, in California, if you are just selling products at a trade show, you do not have to pay CA taxes.

StudyingAccounting · 02-01-06, 08:27 PM

So ... as far as raw tax (so to speak) is concerned, there is no major downside of forming a company in Delaware and operating in California (or New York), is there? It's just that you'd have to do some extra paperwork mostly related to tax and accounting, right?

02-01-06, 09:04 PM

Not really, that's why many large corporations are based out of Delaware.