Asked in Business Law, Tax Law and Business Formation for Colorado

Q: Purchasing an existing company, trying to figure out where to incorporate for best tax advantages.

I am from Colorado. I am purchasing an existing company in TX. That company will be manufacturing product in TX and I will have a partner there. The product will be built and shipped from that third party manufacturer to likely all 50 states. My question is when purchasing the company, can I set up the corporation in WY, then register as a foreign company in CO and TX or should I register the company in my home state of CO or my partners state of TX where the third party manufacturing is done? Want to set up the structure properly to avoid fees and also for the best tax strategy.

1 Lawyer Answer
D. Mathew Blackburn
D. Mathew Blackburn
  • Licensed in Colorado

A: Generally the best approach is to register in the state of operation. Also be aware you will pay income taxes to CO regardless of where you set up the LLC because an LLC is a passthrough entity and you are a CO resident.

You need to retain a business/tax attorney that can advise you on the legal and tax ramifications of not only where to set up the LLC but also state sales and income tax nexus.

Timothy Canty agrees with this answer

Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.

The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.

Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.