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Stephen G.
Stephen G. , Sr Financial Expert
Category: Finance
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Experience:  Extensive Experience with Tax, Financial & Estate Issues
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I want to open a new LLC for my telephone support service for

Resolved Question:

I want to open a new LLC for my telephone support service for computers. I do not sell any tangible goods.Its just phone support. I have many customers in New York State, but I live in North Carolina. My questions are:
- Which state should I open my LLC in ? I have no address in NYS, or office, etc.
- Am I required to charge sales tax for non-goods like telephone support ?
- If yes, then who do I pay the sales tax to ?
Submitted: 3 years ago.
Category: Finance
Expert:  Stephen G. replied 3 years ago.

Stephen G :

You are going to work in North Carolina, so the logical choice would be North Carolina.

Stephen G :

North Carolina rules would govern the sales tax as you have no place of business in NY.

Stephen G :

However, as you probably have heard, this is a hot topic as far as internet transaction with multi-state customers, so things may change.

Stephen G :

I can look up the NC rules on Sales tax re services if you don't already know the rules;

Customer:

Thank you Stephen - but perhaps I was not clear. I want to continue to work with my customers in NYS. So you are saying that the logical step is to setup the LLC in NC, and follow the NC sales tax collection rules ? Yes, thanks - I am aware of the sales tax wars going on in the internet sales areas. Mine is not of that category, I'm not selling goods.

Customer:

Yes, thanks. I am in need of the tax rules in NC before I open the LLC in the next few days.

Stephen G :

OK, give me a minute. Do you pay any sales tax for the services you purchase, auto repair etc.?

Stephen G :

Here's a question/answer from the NC Tax Department

Customer:

"Persons engaged in the business of repairing automobiles and other motor vehicles are liable for collecting and remitting the general rate of State tax and any applicable local sales or use tax on the sales price of any parts, accessories or other tangible personal property which they furnish in connection with repairing their customers’ vehicles. Charges for labor to install the parts, accessories and similar property are not subject to tax if such charges are separately stated on the customers' invoices and in the vendor's records; otherwise, the total charges are subject to the tax." Reference: http://www.dornc.com/practitioner/sales/bulletins/section35.pdf#35-7

Stephen G :

Are any services taxable?









Generally services are exempt from sales or use tax, but laundry and dry cleaning services are taxable at the combined 6.75% in seventy-four counties (7% in Alexander, Buncombe, Cabarrus, Catawba, Cumberland, Duplin, Edgecombe, Greene, Halifax, Haywood, Hertford, Lee, Martin, Montgomery, New Hanover, Onslow, Pitt, Randolph, Robeson, Rowan, Sampson, Surry and Wilkes Counties, 7.25% in Mecklenburg County, and 7.5% in Durham and Orange Counties) State and local tax rates. Telecommunications service and ancillary service, and video programming are taxable at the combined 7% general tax rate in all counties.
Stephen G :

Generally, most services are not subject to the sales tax in most jurisdictions.

Stephen G :

Are you going to be the only member of your LLC?

Customer:

That's what I am thinking. If I sold computers or software, then I would be obligated to charge them tax.

Customer:

yes, I will be the only member of the LLC

Stephen G :

Not if they are delivered out of state.

Customer:

Ahh. Right.

Stephen G :

That's another whole area.

Customer:

Yes, and I understand that it is grey and ever-changing/

Customer:

I just don't want to start making mistakes from the start of my opening.

Stephen G :

So, for income tax purposes you'll just have to file your Schedule C for the LLC.

Customer:

grey area I meant.

Customer:

Right. This just say, whatever income is made must be reported as personal income, correct ?

Stephen G :

You know Amazon is going to start charging sales tax for out-of-state sales in October?

Stephen G :

Correct, you fill out a Schedule C with your personal 1040.

Customer:

Yes, I saw that. Also, (and what concerns me) is that they will begin taxing cloud services/hosting.

Customer:

That will be tough on the IT companies.

Customer:

Thanks for you help today Stephen. I am better prepared now.

Stephen G :

I guess it isn't clear whether or not it is a rental or a service

Customer:

right.

Stephen G :

I'll leave my contact information in case you want to reach me here again

Customer:

OK. thanks. Have a nice night.

Stephen G :

If you need to contact me again with any tax or financial questions, you can just ask for "Steve G" at the beginning of your question. Again, please remember to rate my response. Bonuses, where you think they are warranted, and excellent ratings, are always most appreciated. Thanks again for using JustAnswer.com.You may get a short survey from the site; if it isn't too much trouble I would appreciate it if you would answer it; the survey results are used to rate our performance;

Stephen G. and other Finance Specialists are ready to help you
Customer: replied 3 years ago.

Stephen answered my questions quickly and precisely. I would recommend consulting him in the future, I certainly will.