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Incorporated Out of State

2009-09-29 by

Today TaxMama hears from Barry in New York, who wants to know. “I have an LLC incorporated in a different state than the one I reside in. I will run an Web-based business under this LLC. Does having the company incorporated in a different state create any tax complications or costs?”

Dear Barry,

You bet it does! Especially in the State of New York. They are among the most aggressive states when it comes to collecting money that is due to them.

I just can’t understand why someone would set up an LLC or corporation without consulting with their business attorney and tax professional first.

Let’s face it, you may be running a web-based business. But you are running it from your home in New York. Heck, in your case, BOTH New York State AND New York City want a piece of your pie.

You have to register your out-of-state corporation in New York with the Secretary of State’s office.

You will have to file all sorts of tax returns – sales taxes, income taxes and perhaps even payroll taxes, depending on how you have set up your LLC.

Please meet with a good, local tax professional who can help you catch up with prior year filings in New York, set up the current year properly. Then stay in touch with your tax pro on a regular basis to help you minimize your taxes and stay out of trouble.

And remember, you can find answers to all kinds of questions about where to incorporate and other tax issues, free. Where? Where else? At
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New York Secretary of State's Site
Information for corporations
New York Department of Revenue and Taxation
For information about sales taxes, income taxes and payroll taxes

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  1. Forrest Davis, EA Says:

    Typically, the "foreign entity" registration for the state where business is conducted is more than the registration for in-state companies. Plus, in the other state, you will have to pay for somebody (typically a law firm) to serve as the "registered office" in that state since you are located there. For big, multistate companies that are formed in Delaware or Nevada, that's no big deal but for small companies it adds a bunch of needless overhead.

  2. Ann Says:


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