Re: Which state do I get my business license in?

Tax-wise, California taxes you on all of your income no matter where it is
earned. The do give some allowance for State taxes in other States.

The first thing you might want to do is limit your liability. An LLC or LLP
is easy to do and does just that. It will cost you about $900 in fees and
taxes to the State and $800 each year after that minimum. I seem to recall
new C-corps have waived franchise fees for 2003/2004 so you may want to go
that way and save yourself $1600.

Your local city and/or county may also what a business license. You can
check with them also.

Now, why do this? Well, you move your expenses from Misc. Deductions on
Shed. A to business expenses on Schedule C or E. This will go a long way to
keeping you out of AMT land which wipes out most of your misc. deductions.
You also limit your personal liability to your investment in your company.
Make sure you follow the alter-ego rules the IRS uses to determine if your
business and personal financials are mixed. A safe way to do this is to have
a business bank account and pay yourself with a check. Try to pay for all
business expenses through the business, but if you do use personal funds,
fill out an expense reimbursement, submit it to your business and get a
separate check for expense reimbursement. Prepare quarterly statements and
submit them to your accountant. Don't forget to pay your quarterly taxes to
CA and the Feds. You may also want to get a resellers permit. Once you have
a business, you can create other venture through your parent company. You
can purchase all kinds of things at a discount and not pay sales tax until
the end of the year. You only need to bring your sellers permit with you or
register as a vendor with the store. Pretty slick, huh?

Now, for the other State, you will have to check with them in your
particular industry. Check with the Secretary of State. If you use a
management company there, you may not need to register at all.

Good luck

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Fred Parker
Lynn Consulting Group, L.L.C.
http://www.lynnconsultinggroup.com
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