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PDtax
PDtax, CPA firm owner
Category: Tax
Satisfied Customers: 1937
Experience:  32 years tax experience, including four years at a Big 4 firm.
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I own an S Corp in Texas. I want to begin selling in California

Resolved Question:

I own an S Corp in Texas. I want to begin selling in California through an Independent Contrator. Should I just get a seller's permit in California or would it be better to incorporate under the same name in California?

 

It looks as though California wants a lot of information and sales $$ in Texas. If I incorporate in CA, I would not have to give them any info except sales in CA?

Submitted: 1 year ago.
Category: Tax
Expert:  PDtax replied 1 year ago.

PDtax :

Welcome to the site. I will be helping you today.

PDtax :

to Q & A for response...

Expert:  PDtax 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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If you haven’t already done so, please rate your answer above. Or, you can reply to me using the box below.
Customer: replied 1 year ago.

I am sorry. I did not find a chat window or an answer?

Expert:  PDtax replied 1 year ago.
Hi Carolyn,

If you begin selling product in California through an independent contractor, you would have income in the state, but the corporate tax would only apply to the income apportioned to that state. You do not need a separate corporation to manage those sales.

I would not open a new corporation to do business there. High cost (there's a high annual minimum franchise tax), the extra compliance cost (Fed/CA tax returns), a second CA salary to you, now your personal income taxes are more complicated,...the second corp isn't a good solution. Your total state taxes will be less, and the reporting easier, if you just sell to your contractor and he/she resells in the state.

Thanks for asking at Just Answer. If you need anything more, or if I can clarify my response, please ask. I'm PDtax.
Customer: replied 1 year ago.

I will be selling medical equipment for About $30,000. I have not found anyone who can afford to purchase from me. I want PO's made out to me so that I can invoice the hospital direct and just pay salesperson a 33% commission. So I would be doing the invoicing and collecting taxes.


Independent contractor said he would invoice but I don't want him in posession of money. He wants to pay me AFTER customer pays him.

Expert:  PDtax replied 1 year ago.
Thanks for the additional input. I think I have a solution for you.

The tax issue is one aspect, but managing long distance sales is another. You have located an independent contractor who can't pay you for the equipment and resell it. If you did, easy solution, and my first answer covers it.

Salesmen are a funny breed, they think they should be paid before anyone else. Have the hospital pay you directly, then cut the commission check when the payment clears. Asking for joint checks or a check to the sales agent and another to you is unattractive.

If this contractor can't take title and pay you, finding another might be your best option. If they can not support a line of credit or otherwise be able to pay for your product, I would steer clear of them. Just imagine the trouble and expense if you did not get paid after you shipped, and the hospital paid your contractor.

This is not tax driven advice, but it sounded like you had concerns about selling to your contractor on credit, and waiting for your payment from the other side of the country.

Thanks again for asking at Just Answer.
PDtax, CPA firm owner
Category: Tax
Satisfied Customers: 1937
Experience: 32 years tax experience, including four years at a Big 4 firm.
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