Have Business Locations In Different States? You Need A Tax Attorney

As a manager, you wear many hats within your own company, and it is appropriate that you personally handle tasks requiring your specialized insights and skills. As an effective manager, you also know which tasks should be delegated to others. Some don’t require specific talents, and your time is better spent elsewhere, or, tasks that require knowledge outside your area of expertise are best left to professionals in the field. Conducting business across state lines comes with legal and tax implications. Unless tax law is your specialty, the job of ensuring you have permission to do business in each state is best left to a qualified tax attorney.


You are a foreign entity in 49 states

Although it sounds odd, if you formed your corporation or LLC in New Jersey, the State of New York considers you a foreign business. Only in New Jersey are you considered a domestic corporation. It is the same with each state across the country. If you want to do business in a state other than your own, you are required to file with that state’s Department of State. The process is called foreign qualification.


The definition of “transacting business’ varies by state

If you operate an online or mail order business, you may be exempt from the foreign qualification requirement. If you add a brick-and-mortar presence in a foreign state – an office or warehouse – this may change your status. A tax lawyer can determine which states require you register your online business.
For storefront retailers and manufacturers, a physical presence, buildings and/or employees, usually requires foreign qualification. Each state has different standards, fee schedules and tax codes. Tax attorney’s, although licensed by individual state bar associations, know and understand the requirements of each state. Failure to meet the requirements for foreign qualification will result in back taxes owed, fines and penalties, a costly proposition.


What a tax attorney can do for you

While each state has different rules, generally, before engaging in business in any state, you must register with the foreign state and pay the required fees. You must conduct a search of businesses in the state to determine if your company’s name is available. Another business may already be using your name. If this is the case, you will need to assume a new name for operations in that state. You must also select a registered agent to act as a liaison between your home state and the foreign state. A tax lawyer can handle these processes for you.


Seek the advice of a tax attorney before launching your business

There may be tax advantages to forming your corporation or LLC in states other than the one you call home. You may want to incorporate in several different states. A tax attorney can advise you on the advantages and disadvantages of incorporating in each state and recommend how you should structure your business to keep your tax obligations to a minimum.


Gillian Burdett is a freelance writer covering all things home and living. Her work can be found on Examiner.com.


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