Changing the State of Domicile for a Business

There are many states that are more employer friendly than California and changing the domicile or home state of a business may be desirable for many reasons. 

Changing the domicile of a business entity can be done by filing the necessary forms with the Secretary of State. Those companies may still be subject to registration and tax of another state if they have income sourced from that state.

A business may change their domicile for reasons such as, lower operating costs, cheaper insurance, fewer state audits such as IRP (International Registration Plan) and employment tax audits.

When deciding to move to another state, tax implications must be considered if business is still being conducted in California.  A non-resident tax return may still need to be filed for the state of California if the following is applicable,

• the taxpayer is actively engaging in any transaction in California for the purpose of financial gain,
• it is organized or commercially domiciled in California, 
• its sales in California exceed a certain threshold,
• its real property and tangible personal property in California exceed a certain threshold,
• its California payroll (compensation paid) exceeds a certain threshold,

Please contact us if you would like us to evaluate your tax obligations as an out of state foreign entity in California.  We assist corporations, partnerships and limited liability companies (LLC’s) navigate the complexities of state taxation.