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What state do I pay taxes to?

Asked by: Anne - 17 January, 2014
https://d25eic0jctudgb.cloudfront.net/images/site/avatars/default.png-f1597c1da25f30f8c1a941405e8391c8 I registered my online company in Delaware, but will be doing transactions in California. How does taxes go for me when the first year is up? Do I go by Delaware's tax? California? Both?
Answered by: Ray Albert - 18 January, 2014
https://d25eic0jctudgb.cloudfront.net/images/site/avatars/194.jpg-630c771619e92bede7e6f696b56767b9 Dear Anne,

If you are referring to sales tax on sales of physical products, questions of sales tax related nexus are tricky and depend on individual situations. I want to point you to a question we answered in the past that explains how nexus is created: http://www.incorporationanswers.org/thread/250/Form-a-LLC-for-online-business-using-Amazon-FBA.html

Regarding personal income taxes, this depends which entity type you have registered. For example, if you have an LLC or an S-Corporation registered in Delaware, the income of the business is passed-through the entity to the owners' personal income, where they would pay personal income taxes to the state they live in, in your case California, as well as IRS.

If you have a C-Corporation, then you will need to file your corporate income tax return with Delaware, and personal income taxes to IRS and state of residence.

It is always recommended to have a licensed accountant/CPA assist you with your specific tax questions and needs.

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