LLC/S-Corp out of state

I’m going to start an S-Corp probably in the next week.

Does anyone have feedback about starting one out of state? Thinking Florida because of no state income tax.

Also Puerto Rico or a foreign country if it’s easier to protect assets. There was a guy that didn’t have to split his assets during a divorce because they were all in a foreign country with his name only lol.

I will be selling products mainly online. Will also have a few trademarks to register.

Get with whoever you are going to have do your taxes. There are a few things that I see wrong with your plan from the get go.

sleek98 said:

Get with whoever you are going to have do your taxes. There are a few things that I see wrong with your plan from the get go.

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What kind of things?

I will be using a virtual office. Reality is I might move to Florida, and keep the virtual for privacy reasons.

sleek98 said:

Get with whoever you are going to have do your taxes. There are a few things that I see wrong with your plan from the get go.

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This. ^^

Very important you consult your CPA. There are different advantages and protections for each type of business you form whether it be S corp, C corp, LLC, sole-proprietor, etc.

Mainly you don’t have nexus in Florida so no reason to register there.

Even if you have a virtual office your still paying state income tax to where you are a resident of, plus depending on what your selling and how much you sell you might end up with sale tax issues in multiple states, but that’s an issue with any form of entity that you create.

I’m not a fan of s-corps unless they are required to get contracts that require a corporation. They box you in too much compared to a single member LLC, your requires to issue w-2s to the owners etc etc etc

there are other items but I’m on my phone and don’t want to go into it all.

easier to apply for your state. Just go LLC. cheap and easy.

sleek98 said:

Mainly you don’t have nexus in Florida so no reason to register there.

Even if you have a virtual office your still paying state income tax to where you are a resident of, plus depending on what your selling and how much you sell you might end up with sale tax issues in multiple states, but that’s an issue with any form of entity that you create.

I’m not a fan of s-corps unless they are required to get contracts that require a corporation. They box you in too much compared to a single member LLC, your requires to issue w-2s to the owners etc etc etc

there are other items but I’m on my phone and don’t want to go into it all.

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I appreciate all the comments. I did work at an accounting firm for a year.

Payroll-business writes check to owner, business files federal and state payroll returns and pays SUTA, FUTA and withholding.

The tax savings on paying Medicare/SS on an S-Corp salary is much cheaper than the whole income of a LLC.

Then there’s the basis advantage so you don’t pay taxes on your own money you invested.

I think Shopify will help calculate sales taxes due.

Not claiming to be an expert though. Every time I have a job I receive low guidance. I was basically a bookkeeper/tax return preparer. Nothing on business formation beyond basics they teach in school.

I have a virtual office in NV for my Scorp. I live in TX. I pay NV unemployment taxes and used to have to pay their MBT tax. I also have to pay $600 annually for my biz license and filing of officers. Look into what taxes and annual fees you are required to pay based on where you want to set it up. Every state is different. As an Scorp you have to pay certain taxes like a Corp does.

Twisted2v said:

I appreciate all the comments. I did work at an accounting firm for a year.

Payroll-business writes check to owner, business files federal and state payroll returns and pays SUTA, FUTA and withholding.

The tax savings on paying Medicare/SS on an S-Corp salary is much cheaper than the whole income of a LLC.

Then there’s the basis advantage so you don’t pay taxes on your own money you invested.

I think Shopify will help calculate sales taxes due.

Not claiming to be an expert though. Every time I have a job I receive low guidance. I was basically a bookkeeper/tax return preparer. Nothing on business formation beyond basics they teach in school.

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You can form a LLC and elect to be taxed as a Scorp.

Twisted2v said:

I appreciate all the comments. I did work at an accounting firm for a year.

Payroll-business writes check to owner, business files federal and state payroll returns and pays SUTA, FUTA and withholding.

The tax savings on paying Medicare/SS on an S-Corp salary is much cheaper than the whole income of a LLC.

Then there’s the basis advantage so you don’t pay taxes on your own money you invested.

I think Shopify will help calculate sales taxes due.

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I am a CPA and have been doing this type of stuff for 9 years.

You can hire a payroll service to do your payroll, most are expensive so a lot of people don't want to pay for them for one employee when starting out.

From a tax standpoint your going to pay the exact same amount of income tax if you were a single member LLC, or an S-corp. You will save the payroll tax over your wages paid, however you will also pay unemployment and the fees to have the payroll done.

Run your projected salary vs the wage limit (137k limit now) to calc the actual savings after paying for the payroll service. If your also paying to have your income tax returns done add in the additional cost of preparing the 1120-s vs just adding the income to a sch C.

There are def advantages to it, but there are also other disadvantages that might not be worth the savings.

What I normally try to get clients to start out with is forming an LLC, then electing S-corp status after a couple years when the income starts to get high and the savings will pay for the added costs.

Then again if your going to make a couple million the first year it may be worth it.

earico said:

I have a virtual office in NV for my Scorp. I live in TX. I pay NV unemployment taxes and used to have to pay their MBT tax. I also have to pay $600 annually for my biz license and filing of officers. Look into what taxes and annual fees you are required to pay based on where you want to set it up. Every state is different. As an Scorp you have to pay certain taxes like a Corp does.

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That is two no income tax states so its a little different from a tax stand point vs a no income tax state and a resident income tax state. But I dont know what state he lives.