Nevada or California – Where to Locate my business

In the US, we have several types of taxes, federal, state tax, plus sales tax and local taxes. Federal tax is the same for each state, you pay taxes directly to the IRS. C-corporation tax used to be 35%, after the administration has released the new tax code, C-corporation tax reduced to 21%. This is to incorporate companies in the U.S.

Every state has different tax provisions and different taxation laws, primarily the state income tax and sales tax.

Some states, such as Oregon, have no State Sales Tax. Florida doesn’t have an income tax for a natural person and S-corporation. C-corporations must pay corporate taxes. California has personal tax up to 12.3% and C-Corporation taxes to 8.84%. You also need to be careful with county and city tax or district tax. This might be the case for San Francisco or Sacramento.

Nevada doesn’t have an income tax for both persons and corporations (not mentioning LLCs as LLCs are taxed on a personal level and being a LLCs are pass-through entity). In that case there is a commerce tax for companies with an income exceeding $4,000,000.

Government Offices in Nevada are very friendly. They want to have more business so they don’t bother clients with questions or office inspections. This is very important for any business. Imagine you are starting a business, and instead of focusing on earning money, you might be distracted by state or local regulations. I’m not saying that it is not important to follow up with the government ordinance but I am making the point that it might keep you from focusing on your goal earning money. There is nothing worse than having unproductive days, especially As you are starting out. It might be a game changer.

If you operate in California, you should register your company in the state where you operate and file foreign qualification. E.g. if you are registered in Nevada and doing business in California, it is very important to comply with the regulations of each state therefore you need to register where you have employees, rent an office, or having a warehouse, etc.