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Hi, California is certainly NOT the answer (relatively high corporate and LLC taxes) and ver restrictive (i.e, no sevice for capital contribution up front ... basically lots of impediments)
Nevada has no income tax ... and is very pro business right now, several incentives
If the SanFrancisci company continues to pay you the Canadian piece is not really a issue ... you onlybpay tax in Canada is you are a resident there
A lot of this might depend on WHERE it is that you do the work... various states have different requirements about registering in that state as a foreign corporation is you actually are long enough to be considered domiciled in that state
Essentially, for now, I'd stay with GA .. what will happen is CA will tax you on their source income, but you will get a credit from GA for taxes paid to another state (the net of that is that you end up paying the higher rate)
One thing top keep in mind ... as an S-Corp (may be stating the obvious here) you don't have to pay self employment taxes on the dividends (profit left over after your salary and other expenses) ... so keep your salary (within reason) as low as would bee deemed "reasonable" (and the IRS doesnt define that, they just base it on comparable salaries, etc.
There ar severn states that have no income tax:
Two states have a limited income tax on individuals. These states taxonly dividend and interest income:
The states that top the Tax Foundation list as the most tax-friendly are: 1. South Dakota: No corporate or individual income tax2. Wyoming: No corporate or individual income tax3. Alaska: No individual income tax or state-level sales tax; however, there are local jurisdictions that impose sales taxes4. Nevada: No corporate or individual income tax5. Florida: No individual income tax6. Montana: No sales tax7. New Hampshire: No sales tax8. Delaware: No sales tax, but second worse corporate income tax in the nation; however, does have a favorable business law environment9. Washington: No individual or corporate income tax10. Utah: Assesses all major tax types, but has low property tax rates and a favorable unemployment insurance tax system
Another thing to keep in mind with the commuting, be the way IRS deems business travel as deductible is by determining your tax home
And the time frame is important ... that is to say, ...
From IRS: "Travel expenses paid or incurred in connection with a temporary work assignment away from home are deductible. However, travel expenses paid in connection with an indefinite work assignment are not deductible. Any work assignment in excess of one year is considered indefinite."
And on the tax home piece..Again directly form IRS: "Generally, your tax home is the entire city or general area where your main place of business or work is located, regardless of where you maintain your family home. For example, you live with your family in Chicago but work in Milwaukee where you stay in a hotel and eat in restaurants. You return to Chicago every weekend. You may not deduct any of your travel, meals, or lodging in Milwaukee because that is your tax home. Your travel on weekends to your family home in Chicago is not for your work, so these expenses are also not deductible. If you regularly work in more than one place, your tax home is the general area where your main place of business or work is located"
Seems as if, given the info you've provided some of these travel expenses issues may be a cery large factor
Here's the IRS guidance on this:
But again , in terms of working in other places (depending on who is actually paying you) your best practice is going to be sure to take the foreign tax credit (if applicable) http://www.irs.gov/Individuals/International-Taxpayers/Foreign-Tax-Credit and the state tax credit for your home state (resident state) against taxes paid in other states: http://taxes.about.com/od/State-Income-Taxes/a/multiple-state-tax-returns.htm
This is the overview ... but it sounds like (if it's possible) your "tax home," the length of your assignments/projects, (may be the most important, given that this is where much of the variation lies in your federal tax deductions, other business expenses will be what they will be) ... and then, to a lesser extent, looking at the various states that have no or low income tax and other incentives (although state taxes are not nearly as big a financial piece of the tax cost pie)
(if it's possible to project, that is )
By the way California has a relatively high S-corp tax and even if your expenses take your profits down to nothin, they have a minimum $8000 per year corporations tax
( but you are, of course) ... that piece about not being taxed at the federal level was frm them ... California is VERY aggressive, relatively speaking
in ATL here, by the way
Questions? ... I've tried to lay out the important pieces
... still don't see you coming into the hat here , s I'll move us to the Q&A mode (that will allow you to see this all at one time better) ...We can still continue a dialogue there, just not in real-time as we can here Also, I'll paste everything above in the Q&A window so you can see it all ... Let me know if you have any questions at all
Hi Line. I can't believe that I told you that I have an S-corp! That is typing error. I have a C-Corp. How does that change the above?
Lane, thanks. I find your advice a little bit generic, but on the other hand because I am busy I have been unable to ask more questions so I thought it would be unfair to keep this open longer.
will do. Thanks.