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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16576
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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If I start an LLC in Nevada using a virtual mailbox address

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If I start an LLC in Nevada using a virtual mailbox address in LA, while I/owner resides in NY/NJ, will I have to pay taxes in all three states? This is a purely online business with no actual physical offices.

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 :

How are you today?

MyVirtualCPA :

Is the virtual address in Louisiana or Los Angeles? Some people say "LA" when they mean Louisiana and others say "LA" when they are referring to Los Angeles, California

Customer:

Virtual address is in Walnut, CA (close to Los Angeles)

MyVirtualCPA :

You will definitely owe tax to NY/NJ

MyVirtualCPA :

You do not owe tax to Nevada and I'm double checking about California

MyVirtualCPA :

The virtual office may create tax liability in California but I want to double check

Customer:

Will that tax to NY/NJ be on ALL transactions - or only for the ones where we sell to NY/NJ resident?

MyVirtualCPA :

Are you speaking about sales tax or income tax?

MyVirtualCPA :

For income tax you will pay income tax on all transactions. For sales tax, it would only be those sales within the state

MyVirtualCPA :

Yes, the virtual address in California would create California tax liability as it is like you are doing business in that state

MyVirtualCPA :

I would consider getting a virtual office in Nevada or New York

Customer:

So if we get a virtual office in NY, and an llc in Nevada, we will pay income tax only in NY, and an annual tax (fixed) in Nevada. Right?

MyVirtualCPA :

If you live in New Jersey you would owe tax there too

MyVirtualCPA :

You would owe income tax to New York, and New Jersey if you live there - and Nevada doesn't collect income tax.

Customer:

But that is like dual taxation - is the NY and NJ going to tax us on the same income base?

MyVirtualCPA :

Do you live there?

MyVirtualCPA :

In both states?

Customer:

nope - live in NJ. But thought NY virtual address will sound better.

MyVirtualCPA :

So you would have no office in New York, except a virtual office? I thought you lived in New York

Customer:

just a virtual office (not yet - going to move our virtual office from CA to NY - per your advice).

MyVirtualCPA :

Then you open yourself up to state tax in New York, too - why not just use a Jersey address

MyVirtualCPA :

Then you only have to worry about New Jersey

Customer:

Makes sense. I just thought (in my naivete) that even if I have NY address (virtual) and NJ (living add), I would still pay the same tax (just will get somehow divided between NY and NJ) :-).

MyVirtualCPA :

No, you would have to pay tax in both states since you are doing business and live there

MyVirtualCPA :

So, I would do the NJ virtual office, with the NV corporation

MyVirtualCPA :

No income tax is due to Nevada as they do not collect business income tax

Customer:

Awesome! Thanks a bunch for your help.

MyVirtualCPA :

You're welcome

MyVirtualCPA :

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