What state is the best to open an on-line business in?

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What state is the best to open an on-line business in?

I’m about to open a new on-line business, in which I will sell my designs (custom-made pictures). What is the state that will be best for me? (I live in CA but I can move). I expect most of my customers to be from CA. I know that if the business is located in other states, I can avoid state taxes. Also, what form -LLC or C or S corp?

Asked on May 10, 2011 under Business Law, California

Answers:

MD, Member, California Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

You can't necessarily avoid state taxes if the state laws differ in terms of whether it is money you are making in other states. Further, you will need to register in every state in which you conduct business; some state like California crack down hard if you fail to do so. Consider talking to a business attorney who handles entertainment law (copyright, trademark and licensing). This will help you to determine if a sole limited liability corporation is better for you than a sole s corporation that gives you pass through taxation. Consider that if you have an s corp, you will likely be taxed much differently and in some states you may have to pay taxes on any profits you realize from the llc. Selling custom-made designs may be something you wish to copyright and perhaps trademark. Review some literature at the U.S. Copyright Office and consult with a copyright/entertainment attorney in California.


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