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Lev
Lev, Tax Advisor
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Experience:  Taxes, Immigration, Labor Relations
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I am re-locating my formed-in-Texas S-Corp consulting services

Resolved Question:

I am re-locating my formed-in-Texas S-Corp consulting services business to Virginia.

I intend to keep my business banking in Texas if possible.

I realize I need to file a change of address with the IRS.

What steps do I need to go through with respect to each state's requirements? I do not think I need to re-form the corporation in Virginia, but how do I go about getting the official notifications and permissions documented?
Submitted: 3 years ago.
Category: Tax
Expert:  Lev replied 3 years ago.

LEV :

Hi and welcome to Just Answer!
What is a legal business form of your S-corporation? Was it registered as an LLC in Texas?

Customer:

It is an S-Corp, not an LLC.

Customer:

It is registered in Texas as an S-Corp.

LEV :

An “S” corporation is not a matter of state corporate law but rather a federal tax election. A for-profit corporation elects to be taxed as an “S” corporation by filing an election with the Internal Revenue Service.
However - when you register your business in TX - it was registered as a Corporation - is that correct?

Customer:

Yes, that is correct.

LEV :

There is no issues with the IRS - you simply change the address - and continue to file S-corporation tax returns.


In Virginia your TX corporation is treated as a foreign corporation (i.e., organized or existing under the laws of a state or jurisdiction other than Virginia) and may not transact business in Virginia until it obtains a certificate of authority or certificate of registration from the State Corporation Commission.
When a foreign business entity “registers” with the Commission, it obtains a certificate of authority or registration to transact business in Virginia. It remains incorporated, organized or formed, however, under the laws of the foreign jurisdiction after registering in Virginia.


Another option is - domestication. That is the process by which a foreign corporation becomes a Virginia corporation. That is, the business entity ceases to be incorporated under the laws of the foreign jurisdiction and instead becomes incorporated under the laws of Virginia.
Either way - you may keep your bank account and federal tax ID.

LEV :

How do I register a foreign business entity to transact business in Virginia?


Step 1: Obtain an application for a certificate to transact business in Virginia, read the instructions, and fully complete the application.



  • For foreign stock corporations, use form SCC759/921.

  • For foreign nonstock corporations, use form SCC759/921.


Step 2: From the secretary of state or other custodian of business entity records in the state or other jurisdiction in which the business entity is formed or existing, obtain an authenticated (i.e., certified) copy of the business entity’s organizational documents, including all amendments. Exception: a registered limited liability partnership will need to provide a certificate of status instead of its organizational documents.


Step 3: Determine the correct amount of fees that are needed with your application.



  • For foreign stock corporations, see Corporation Entrance Fee Schedule. Note: the entrance fee is based on the number of authorized shares set forth in the corporation's articles of incorporation, not on the number of shares that are issued and outstanding.

  • For foreign nonstock corporations, the fees total $75.

  • The fee is $100 for foreign limited liability companies, business trusts, limited partnerships, and registered limited liability partnerships.


Step 4: Forward the application, documents and fees to the Office of the Clerk as directed on the back of the application.

LEV :

Additional information is available at Notice to Foreign Corporations
The business entity will need to register with the Virginia Department of Taxation. and, if it has employees in Virginia, the Virginia Employment Commission.

Customer:

From what I can gather, obtaining a certificate of authority to transact business in Virginia seems to make the most sense and is the most efficient way. When this is done, does my "foreign corporation" incur Virginia state income taxes? In Texas, a "franchise tax" is in place for businesses, but only for those doing $1M or more in business from there.

LEV :

Yes - you will be a subject of Virginia tax laws and VA corporate taxes.
Corporations that have elected S status for federal purposes are automatically treated as S corporations for Virginia purposes, and file their returns on Form 502 by the 15th day of the fourth month following the close of their taxable year.
A pass-through entity (the term "pass-through entity" includes S corporations) is any entity other than an individual estate or trust that is recognized as a separate entity for federal income tax purposes and the owners of which report their distributive or pro rata shares of the entity's income, gains, losses, deductions and credits on their own returns.

Customer:

I will first have to obtain the VA certificate of authority, then file a VA return after the fact (my business's tax year coincides with the calendar year...therefore, 4/15 returns were filed elsewhere. I think that answers my questions. Thank you, LEV.

LEV :

Yes - 4/15 of following year - the same way as you file your federal tax return for the S-corporation.

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 23254
Experience: Taxes, Immigration, Labor Relations
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