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Living in NJ, formed LLC in DE

Asked by: Cindy - 18 September, 2012
https://d25eic0jctudgb.cloudfront.net/images/site/avatars/default.png-f1597c1da25f30f8c1a941405e8391c8 I am frazzled to the point of total ignorance right now.

I will be selling my patent pending product solely online. No store front. I will also be selling to retail stores at wholesale prices.

I make part of the product at my house and I will ship the completed product from NJ to my online customers.

I am formed in NJ but realized when setting up the website that the- website - is considered a physical presence in the state of NJ and thus subjects all my online customers to its sales tax of 7%.

I reformed my business in DE. My questions before I totally dissolve my NJ formation/business filing is:

Am I considered a nexus because I mail the product from NJ?
Am I considered a Nexus because I make a portion of the product in NJ?
Do I have to file in NJ as a Foreign Entity to continue here? (Assuming I dissolve the biz in NJ)
Do I have to charge anyone sales tax or just NJ residents NJ Sales tax?
Do I have to file state taxes on the business?

Thanks!
Answered by: Robert Kowalski - 18 September, 2012
https://d25eic0jctudgb.cloudfront.net/images/site/avatars/35.jpg-687fc92d5f6c5febcbdccb6895b08b8c Dear Cindy,

Technically, by shipping your product from NJ you are creating a nexus in NJ, which would require you to register and collect sales tax. Since you are also manufacturing the product in NJ (or assembling it) your nexus becomes stronger and I believe you would be required to register for business in NJ (either as "domestic" or "foreign" entity).

Since you already registered in Delaware and plan to keep your home registration in that state I presume you would want to dissolve the NJ company, and then form a foreign entity of your DE LLC in NJ. As far as sales tax goes you will only collect it from your NJ buyers (and Delaware has no sales tax, so here you are covered).

Finally, if your business is an LLC or S-Corporation then you have no state tax to pay on company level, if its C-Corporation then you would be required to pay corporate taxes in NJ on the portion of the income created in NJ, and in DE on the portion of the income created in DE.

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