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Ask Matthew Breecher Your Own Question
Matthew Breecher
Matthew Breecher, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 186
Experience:  Director
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My wife needs to incorporate, either an LLC or an S-Corp.

Customer Question

My wife needs to incorporate, either an LLC or an S-Corp. She will be doing business in Illinois. What would be the best state to file in for tax purposes? I was thinking Wyoming. Will the costs to function as a foreign entity in Illinois outweighs the tax savings of filing outside the state?
JA: The Accountant will know how to help. Is there anything else the Accountant should be aware of?
Customer: Its a laser lipo reduction business that could earn monthly receipts of $10-20k. We don't have a lot of cash on hand.
Submitted: 11 days ago.
Category: Tax
Expert:  Matthew Breecher replied 11 days ago.

Hello, I would like to assist with your question. Please remember, as per the terms of this website, Answers of Experts on the Site are to be used by Customers for general information purposes only, not as a substitute for in-person evaluation or a specific professional opinion.

Expert:  Matthew Breecher replied 11 days ago.

You will always have to file a return and pay taxes in the State you earn money and operate your business. Creating a foreign company/corporation would just add to the administrative burden and would not save money. For some reason I have had this question a few times.

Expert:  Matthew Breecher replied 11 days ago.

So, all your revenue will be earned in Illinois and you will pay state tax in Illinois. Your better approach, once you have a business up and running, it to try to deduct as much as possible as business expense (internet, cell phones, etc.) as being necessary to operate your business.

Customer: replied 11 days ago.
But if Wyoming levies no state corporate income tax on corporations or personal income tax, wouldn't that save us money? We would be filing taxes in Wyoming, no?
Expert:  Matthew Breecher replied 11 days ago.

You would still file state income tax reports in Illinois for all revenue and expenses and pay tax in that state. This is because you operate your business in Illinois. Also, Illinois is your "nerve center" (headquarters), so you are essentially an Illinois business first regardless of where you file your corporate documents.

Expert:  Matthew Breecher replied 7 days ago.

I hope I answered your question with sufficient detail, accuracy, and completeness based on the facts communicated. I would be happy to expand my answer should you need clarification; before you rate my answer. Accordingly, please rate my answer, based on thoroughness and accuracy, rather than any good or bad news/content. We (the experts) are only compensated when an answer is accepted and rated. I appreciate your prompt response. Sincerely, ***** ***** Breecher, CPA.

Expert:  Matthew Breecher replied 4 days ago.

Hello, I just wanted to check in to see if you need further clarification with your question. I would be happy to provide more information if needed. Please remember, we the experts are only compensated when our answer is accepted. Accordingly, please rate my response when you can.