Atlanta CPA on…Where All Does My S Corporation Have to File State Income Tax Returns?
State Reporting 101: Where All Does My S Corporation Have to File State Income Tax Returns? In general you will want to register your corporation in all states where you transact business (i.e., have employees, locations and where you actually serve your clients). The below is a sample letter we might get from a client who has employees and operations in different states:
John, I have been contacted by the State of Alabama via mail with a notice for failure to file state taxes for my company for 2009.
I called and talked to a representative at the state dept of revenue. She said that because I filed with the secretary of state in 2009 for authority to do business there and have employees located there, I have to file for 2009 and forward. I told her that all of our revenue has been reported and filed with the state of GA, as we are an S Corp and GA residents. She advised we are still required to file in AL for 2009 and forward.
I am not sure what to do. What are your thoughts? We have our 2010 data pretty much ready for you, but it is not broken out by state. What should I do related to this for 2010? Please advise.
Below is my response:
She is correct. To get started on this as you are a cash based taxpayer I would need by year.
Fixed Assets by State
Revenue by State
Payroll by State
Rent by State
As you are giving me these please be sure to ensure that the by state totals equal the amounts as listed on the state returns.
The Below is a general summary of guidelines on when you will want to incorporate in a given state. For all states where you incorporate you will want to be sure that you also file corporate income tax returns and most often personal tax returns as well. Please be advised that these rules and guidelines and the way that income is apportioned/allocated varies from state to state.
Basics of Incorporation
Knowing a few of the basics of where and when to incorporate your business in Georgia will provide you with needed insight to avoid unnecessary pitfalls, fees, and legal issues that befall many as a result of their failure to have a rudimentary understanding of the issues. There is a lot of hype out there about where to incorporate that may well lead you to discover that the steps you made to protect your Georgia business while in good faith, have caused complexities that hurt rather than help your business. In general there are several criteria to evaluate when considering where to originally incorporate/domicile your business. All the criteria should be looked at in aggregation to consider including:
Core Business Operations – Where your business actually earns money and produces income is a critical component to consider in determining where your business should legally domicile and register. For example if your headquarters is in Georgia, you would incorporate in Georgia absent any other substantive issues. Then if your business transacts business operations in other states you would want to consider registering your corporation as a foreign corporation in another state. This designation does not register you as a foreign corporation to the U.S. but to the state where you are transacting business and have substantive business operations.
Employees – For all states where you have employees you will want to be sure to register and incorporate in those states whether you have an office in that state or solely have employees who work out of their homes in those states. Accordingly, if you have employees in Georgia, you will want to be sure that you comply with all Georgia payroll taxes.
Physical Location – For all locations that your business has a physical location and on-going physical presence, you will want to register your corporation as doing business in that state. Having a sound risk management plan is an integral part of the incorporation/registration process and is tantamount in making wise and informed decisions. For example, if your business headquarters and management are local, you will most likely want to incorporate the business in Georgia.
Working with your CPA and attorney on these issues before you incorporate is your best defense to ensure that you make wise and informed incorporation and registration decisions so contact us today.
His CPA PC (A Christian CPA Firm) Offers Free Initial Consultations/Interviews offering:
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