Misconception to Register Company in Tax Free State!

Category : New Business Setup
Posted On : 26th Dec 2010

 

We would like to take an opportunity to clear the misconception for registering company in the tax free states.

Some taxpayers are under impression that they are legally allowed to incorporate their businesses in tax free states.

For instance

If you physically have a store in the state of New York and involved in taxable retail sales you can not incorporate or register company in the state of Delaware to avoid paying sales taxes to the state of New York. Yes, you can incorporate your business in the state of Delaware but still you are required to obtain a certificate of authority or foreign qualify your business in the state of NY to conduct business and collect sales taxes according to your state, city and county

OR

If you are operating business in the New York City and running a real estate business you can not establish your business in the state of Wyoming to save local and state taxes. You are still required to pay taxes to the New York state.

Conclusion: To run a painless operation most professionals advise to keep the company structure simple and register your company in the state you are operating instead of creating a complicated structure for your business and paying additional annual maintenance cost for the multiple states.

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