Business owners like saving on state and local taxes, so it’s no surprise that some are considering moving their companies to low tax states, especially after the recent sweeping tax legislation. MWE’s Lance Christensen spoke to CNBC about what you should know before relocating and why it will take more than just moving your headquarters to ramp up your savings.
“Companies are determining whether they can move their business to low tax jurisdictions,” said Lance D. Christensen, partner at accounting firm Margolin Winer & Evens.
“It’s a question that’s one of many asked as a result of this sweeping tax legislation,” he said.
Leaving New York for Florida sounds like a no-brainer, yet tax professionals warn that entrepreneurs should proceed with caution. It’ll take more than just moving your headquarters to ramp up your savings.
The issue of “tax nexus” — where you conduct your business — matters when it comes to whether you can easily pack up and move.
Establishing a tax nexus is based on a number of factors, including where your employees are, where your property is located and whether you have inventory in a particular location.
“If half of my property is in North Carolina and half in New York, I need to file returns in both states,” Christensen said. “The taxes apportioned to those states will be based on shipments of property, where services are provided, and where the property is.”
States themselves also use different methods to collect taxes from companies. Some assess levies based on where the work is performed, while others tax businesses based on where the customers are located. Read More >>>