Definition of Doing Business in a State
To do business in a state you may have to register with the state or a locality or both. The definition and requirements for doing business in a state vary by each state. A company may “do business” in several states, registering separately in each according to state laws.
Consequences and Requirements of Doing Business in a State
One of the significant consequences of doing business in a state is taxation. Businesses that operate within a state are generally subject to state income tax, sales tax, and other state-specific taxes. Regulatory compliance is another significant aspect businesses must adhere to within a state.
Nexus Concerns and State Registration
A company that regularly has operations in a foreign state should register even if there are no resident employees in that state or company offices located there. Case law indicates that a company that regularly operates in a foreign state has a “nexus” with that state and should register.
Titles:
- Interstate Commerce and Remote Worker Grant
- Taxation and Regulatory Compliance
- Nexus Concerns and State Registration
What Does Transacting Business in Interstate Commerce Mean?
Interstate commerce is the general term for transacting or transporting products, services, or money across state borders. The Remote Worker Grant offers up to $10,000 in relocation expenses for those with remote working capabilities.
Considerations for Registering a DBA
A business can register a DBA if it wants to operate under a name other than its legal name. DBAs must be registered at the state and local level. If you want to register a DBA, you typically need to file a form with your local county clerk or secretary of state office.
Necessary Steps for Foreign Qualification
Incorporating a business in a single state allows you to operate in additional states by filing a foreign qualification. This process permits you to conduct business in any other state. Delaware, Nevada, and Wyoming are popular states for incorporating businesses.
Starting a Business and DBA Taxation
A DBA is not taxed separately from your business entity. It doesn’t require additional taxes and is not considered a formal business structure, reducing incorporation fees and complexity.
Best States for Small Business Startups
WalletHub ranked all 50 states across 25 key indicators to determine the best environments for small business startups. Key dimensions considered were business environment, access to resources, and business costs.
Ease of Doing Business Indicators
Doing Business presents quantitative indicators on business regulations and property rights protection compared across 190 economies. However, indicators like employing workers and contracting with the government are not included in the ease of doing business ranking.
Factors to Consider When Selecting Tax-Friendly States
Delaware, Nevada, and Wyoming are considered attractive options for businesses due to tax benefits they offer. Factors such as no state income tax, personal income taxes, and business-friendly corporate tax policies are essential considerations.
Understanding State Tax Policies
After registering your business in each state, you should review FAQs from the Secretary of State’s office for guidance on sales tax issues. Familiarize yourself with state department functions as registration is typically required before working with revenue or taxation departments.