Hmm, how do I mention this to my accountant without sounding paranoid? Does a SaaS company in another state need to worry about this? What about consulting from another state?
"I read a story online about how a small business got hit with an unexpected $64,000 bill for back taxes because the state of California determined that an edge case applied to make it an in-state business. I realize this probably doesn't apply to me, but would you please double check?"
If you physically do all your work in one state you have no problems. When I was consulting I had a VERY booked travel schedule where I was doing an awful lot of work while flitting between multiple aggressive high-tax jurisdictions, so my accountant went through the specifics. Again, took only a couple of minutes while reviewing my travel log.
Relatedly, if you incorporate, your accoutant can walk you through where you should do that. (Delaware C corps are the gold standard in the Valley due to investors liking Delaware's laws/courts. I didn't need to optimize for investors so I have LLCs in Nevada, because they're fairly cheap and can't cause state income tax since Vegas means Nevada will never have one.)
Comments
Hmm, how do I mention this to my accountant without sounding paranoid? Does a SaaS company in another state need to worry about this? What about consulting from another state?
"I read a story online about how a small business got hit with an unexpected $64,000 bill for back taxes because the state of California determined that an edge case applied to make it an in-state business. I realize this probably doesn't apply to me, but would you please double check?"
If you physically do all your work in one state you have no problems. When I was consulting I had a VERY booked travel schedule where I was doing an awful lot of work while flitting between multiple aggressive high-tax jurisdictions, so my accountant went through the specifics. Again, took only a couple of minutes while reviewing my travel log.
Relatedly, if you incorporate, your accoutant can walk you through where you should do that. (Delaware C corps are the gold standard in the Valley due to investors liking Delaware's laws/courts. I didn't need to optimize for investors so I have LLCs in Nevada, because they're fairly cheap and can't cause state income tax since Vegas means Nevada will never have one.)