A business is a commercial, industrial or professional organization that produces goods or services and earns profit from those products. It ranges in size from small sole proprietorships to large international corporations.
When expanding your business across state lines, it is important to understand the laws and regulations of each new location. This is especially true when it comes to taxation and regulation.
If you’re thinking about opening a business, one of the first questions you’ll have is whether it’s legal. It’s perfectly legal to live in one state and own a business in another, and it can also be a financially prudent decision.
If your business has a physical office, or if you have employees, you’ll probably need to form a corporation or LLC in the state where you will conduct your business operations. Both of these structures offer liability protection, which is especially helpful if your business gets sued.
Some states, including Delaware and Nevada, allow you to incorporate and receive tax benefits without actually living in the state. But it’s still important to keep in mind the type of business you run and where your customers are located.
When you start a business, it’s important to understand your federal, state and local tax requirements. Understanding how to file taxes accurately and make payments on time will help you stay on top of your obligations.
Depending on the type of business you have, you may be required to pay state income, business and occupation (B&O) or sales taxes. You also might be responsible for paying property taxes on your buildings, vehicles, furnishings and equipment.
Many states collect income, sales and property taxes to finance public services like infrastructure and education. These taxes are considered “regressive,” meaning they tax people of different income levels at the same rates.
However, some states have agreements called “reciprocity,” which says that you don’t have to pay state income taxes in the state you live in if you work there. You can check with your accountant to find out more about reciprocity.
If you’re looking to break into the big leagues of business ownership, there are a few things you need to consider. One of the most important factors is your company’s location. This is particularly true if you’re looking to sell goods and services within a particular state. You also need to be aware of tax responsibilities affecting your business, as well as any licensing or permit requirements in your target state.
Luckily, most states have helpful resources to help you with this task. For example, the Small Business Development Center (SBDC) may be able to help you figure out what license or permit you need, which is especially useful if you’re new to business. You may want to check out their online library of free resources to find what you’re looking for. Likewise, the small business community is usually happy to share information and tips on best practices with other newbies. The key to success is knowing which tools to utilize for your specific situation, and making sure you get the best deal possible.
Starting a business in a state you don’t live in can be a challenge, especially if you don’t know the registration requirements. Most states have business registration, licensing and permitting requirements, which you can find out more about from local government websites.
In most cases, you need to register your business with the secretary of state in the state you operate your company. You can find filing forms and instructions on their website.
The filing process is fairly easy, but there are some things you should be aware of.
For instance, some states require that you register your company’s name as a trade name or DBA — a “doing business as” name.
Depending on your business structure, you may also need to file initial reports with the state or franchise tax board.
If you need help registering your business in a state that you don’t live in, check with your local government office or an adviser at a SCORE, Small Business Development Center, Women’s Business Center or Veterans Business Outreach Center. They can answer your questions and connect you with free business counseling services.