Re: Forming a corporation
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Originally Posted by
Ook
I'd believe the IRS in regard to your taxpayer ID.
Two other considerations:
1) Fees and Taxes - Michigan, Nevada, South Dakota, Washington, and Wyoming do not have income taxes, though Michigan imposes a value-added tax (VAT) and Washington a gross receipts tax. Some states might not have income taxes or have low rates, but they absolutely hammer you on fees/franchise taxes. Nevada is such an example.
Whatever state you do business in will lawfully be able to tax you, regardless of the state of incorporation. Picking a state to incorporate in for tax purposes is a waste of time and money. Remember, California imposes a state tax on world wide income. So, if you do any business in Cali you will be expected to pay taxes there on all your income. Do business in Cali only if you can do a lot of business in Cali.
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2) Litigation - most corporations use Delaware because it's recognized as being one of the few places you can draw a judge that knows what the hell they're doing. (In contrast to Mississippi, which is viewed as the worst state to litigate in.)
Commit a tort or breach of contract in Mississippi or against a Mississippian, and you will land in court in Mississippi. Your state of incorporation will have nothing to do with where you end up in court. Delaware is, if there is any reason, a frequent choice for corporations is they have a dedicated corporations court that resolves questions of corporate law. Not contracts, not torts, not tax issues. But, the Delaware Chancery Court is very good at litigating questions like the validity of certain issues about the law of corporations.
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Finally, I'd suggest biting the bullet to have a qualified attorney draw up your paperwork- they'd be able to help you avoid any potential gotchas. Good luck.
Good advice. But, I would qualify that by adding you should have a good CPA review your paperwork to advise you on the tax consequences of your incorporation and the various elections you can make.
HTH
Z
Disclosure under IRS Circular 230: To insure compliance with recently released Internal Revenue Rules, this communication was not written or intended to be relied on to avoid federal tax related penalties or for promoting, marketing or recommending to any party any tax related matters addressed herein.