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.
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
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