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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 13210
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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If I set up a Foreign S Corp in New Hampshire and my mfg business

Customer Question

If I set up a Foreign S Corp in New Hampshire and my mfg business is based in CA, can I pay my employee, and purchase any mfg materials through the NH Corporation to avoid payroll and sales taxes?
Submitted: 1 year ago.
Category: Tax
Expert:  Megan C replied 1 year ago.

MyVirtualCPA :

Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.

MyVirtualCPA :

Which taxes are you trying to avoid? California Sales Tax and California Payroll taxes?

MyVirtualCPA :

Unfortunately there is no way around these taxes. You will still have to pay California payroll taxes because the employee is working in California

MyVirtualCPA :

Also, you may avoid having to pay NH sales tax, but if goods are delivered to California you should remit sales tax to the state, even if the person you bought it from did not collect the sales tax.

MyVirtualCPA :

So, the short answer to your question is no...you cannot pay employees and purchase goods through NH to avoid taxes in CA.

Customer :

I can see that with payroll. So if I order materials from a debit card via a NH Corporate Bank Account I have to pay sales taxes on what I buy?

Customer :

I'm sorry I did not scroll up to see the rest of your comment! I only saw "so, the short answer is.."

MyVirtualCPA : Yes. Even if NH does not collect it you are still supposed to remit sales tax to the state.
Customer :

I'm sorry I did not scroll up to see the rest of your response! So if I purchased say, wholesale wax for candles through NH corp and did not pay the wax company sales tax and had the wax shipped to CA you say that I would have to pay sales tax to CA on those purchases? Sorry for the needed clarification. And thank you.

Customer :

Don't be mad. I hit return and didn't know I asked that twice. It just disappeared! :)

MyVirtualCPA : Don't worry. Not an issue. If you are not exempt from sales tax you have to remit sales tax even if the seller doesn't collect.
Customer :

Thanks!

MyVirtualCPA :

You're welcome

MyVirtualCPA :

Please rate my response "excellent" so that I may be compensated for assisting you today\

MyVirtualCPA :

Thanks again for using JustAnswer.com and come back and see me soon

Customer :

:)

MyVirtualCPA :

Thanks again for using JustAnswer.com. Please don't forget to rate! :-)

Expert:  Megan C replied 1 year ago.
Our chat has ended, but you can still continue to ask me questions here until you are satisfied with your answer. Come back to this page to view our conversation and any other new information.

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Expert:  Megan C replied 1 year ago.
Thanks for allowing me the opportunity to help you. Please let me know if I can be of any further assistance to you in this matter. I really enjoyed working with you – please feel free to request me again when you come back to ask another question. Simply enter "MyVirtualCPA" in the subject of your question Thanks again for being a JustAnswer customer
Expert:  Megan C replied 1 year ago.
Thanks for allowing me the opportunity to help you. Please let me know if I can be of any further assistance to you in this matter. I really enjoyed working with you – please feel free to request me again when you come back to ask another question. Simply enter "MyVirtualCPA" in the subject of your question Thanks again for being a JustAnswer customer

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