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My wife needs to incorporate, either an LLC or an S-Corp.

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She will be doing business...
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: 6 months ago.Category: Tax
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Answered in 13 minutes by:
5/16/2017
Tax Professional: Matthew Breecher, Certified Public Accountant (CPA) replied 6 months ago
Matthew Breecher
Matthew Breecher, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 286
Experience: Director
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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.

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Tax Professional: Matthew Breecher, Certified Public Accountant (CPA) replied 6 months 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.

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Tax Professional: Matthew Breecher, Certified Public Accountant (CPA) replied 6 months 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.

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Customer reply replied 6 months 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?
Tax Professional: Matthew Breecher, Certified Public Accountant (CPA) replied 6 months 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.

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Tax Professional: Matthew Breecher, Certified Public Accountant (CPA) replied 6 months 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.

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Tax Professional: Matthew Breecher, Certified Public Accountant (CPA) replied 5 months 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.

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