Our concern comes from some past experiences. Three years back I lived in florida and started an llc in delaware. I ended up not only paying taxes in delaware - but also had to register in FL and pay taxes there.
NV has no corporate income tax. So you would only pay income taxes in the state where you reside.
Can you please let me know what would I need to do once I create an llc in nevada.
a) I believe I will still be liable for NJ income and sales taxes. Is that right?
Rather than reinvent the "wheel" - this is from nolo.com:
The current default rule throughout the United States is that you must collect sales tax on Internet sales to customers in those states where your business has a “physical presence.” The physical-presence rule is based on a 1992 United States Supreme Court decision
, Quill Corp. v. North Dakota
, that addressed the obligations of mail-order businesses to collect sales tax on out-of-state sales; the decision has been extended to include online retailers. Generally speaking, a physical presence means such things as:
- having a warehouse in the state
- having a store in the state
- having an office in the state, or
- having a sales representative in the state.
While the physical-presence rule may seem clear, in the case of Nevada, as well as a fair number of other states, it is necessary to emphasize that in Quill, the Supreme Court discusses not only physical presence, but also several types of potential “nexus” (connection) between a business and a state. One type of nexus is based on the Due Process Clause of the Constitution and another type is based on the Commerce Clause of the Constitution. The type of “nexus” the Supreme Court ultimately found relevant for mail-order businesses was the Commerce Clause version, which—as described by the Supreme Court—means physical presence. However, many states, including Nevada, have used the term “nexus” rather than “physical presence” in their sales tax laws, regulations, or other official documents, and, in the process, have sometimes defined nexus in ways that some people may think goes beyond physical presence.
Limited guidance on how physical presence—or “nexus”—is determined specifically under Nevada law is available in Section 372.724(1)(b) of the Nevada Revised Statutes, which states simply and broadly that, “The imposition, collection and remittance of the sales tax apply to every retailer whose activities have a sufficient nexus with this State to satisfy the requirements of the United States Constitution.” As the requirements of the Constitution are interpreted by the Supreme Court, this statement would seem, in effect, to point back to Quill. (Note: All of Chapter 372 of the Nevada Revised Statutes, which covers sales and use taxes, is available online as a single webpage.)
As you might expect, the corollary to the physical-presence rule is that, if you do not have a physical presence in the state, you generally are not required to collect sales tax for an Internet-based sale to someone in that state. On this point, it is worth mentioning that the Nevada Department of Taxation (DOT) publishes an online FAQ page covering questions on various state taxes including sales tax; in response to a question on Streamlined Sales Tax, the DOT refers to “the U.S. Supreme Court holding that a state may not require a seller that does not have a physical presence in the state to collect tax on sales into the state.” Note that in this statement, the DOT refers to physical presence rather than nexus.
Example 1: You are operating solely out of a warehouse in Baltimore, Maryland and make a sale to a customer in Sunrise Manor, Nevada—a state where your business has no physical presence: You are not required to collect sales tax from the Sunrise Manor customer.
Example 2: You are operating solely out of a store in Reno, Nevada and make a sale to a customer in Paradise, Nevada: You are required to collect sales tax from the Paradise customer.
Example 3: After several years of operating solely out of a warehouse in Baltimore, Maryland, you open a one-room satellite office just outside of Las Vegas, Nevada—a state where previously you had no physical presence. A day later, you make a sale to a customer in Henderson, Nevada: You are required to collect sales tax from the Henderson customer.
A limited number of items sold via the Internet to Nevada customers may be exempt from sales tax under Nevada law. For example, seeds and annual plants that ordinarily produce food for human consumption are exempt from sales tax; similarly, food for human consumption, other than prepared food, is exempt from sales tax. For further information, check Sections 372.260 through 372.350 of the Nevada Revised Statutes and Sections 372.540 through 372.715 of the Nevada Administrative Code.
The Customer’s Responsibility
In cases where the online retailer does not have to collect sales tax, it is the customer’s responsibility to pay the tax—in which case it is known not as a sales tax, but, rather, a “use tax.” In its overview of the use tax, the DOT online FAQ page on state taxes states that, among other things, the use tax applies to Internet purchases; the same FAQ page also provides eight examples where sales tax is not collected and use tax is due, including purchasing items from an Internet site.
For statutory statements about the use tax, see NRS Sections 372.185 through 372.258.
b) If yes, then what would I need to do with NJ filing? Is it just filing of my generated income from LLC or is it more than that?
c) Also I heard that the protection goes away if you dont have assets in the state of incorporation. Is that true?
No, that's not true but contrary to their law about personal liability for owners/members of LLCs.
Also, we will have a registered agent through legalzoom, but they ask for an address while filing the llc paperwork. I was planning on giving then a mailbox address in NJ. Will that be ok - or are u suggesting us to have a NV address? This NJ address is what we will display on our site for people to contactus.
Yes, you can use the NJ mailbox - you don't need an actual NV address.