Relocating S-corp from NY to NJ

computerguru · #1 (**permalink**) 04-11-2010, 09:49 PM

I own a NY S-corp consulting company that I currently run out of my home in nyc. I recently purchased a second home in NJ and would like to move my company to NJ and run it out of my second home. I am thinking this would be advantageous as it would help save NYC corporate taxes.

I realize that if i do not physically make NJ my primary address I would still be subject to NY taxes on my personal due to s-corp. But still believe it would be advantageous by saving on at least corporate NYC taxes. Can someone please validate this?

Would moving the s-corp to nevada or delaware be a better option?

TaxGuru · #2 (**permalink**) 04-11-2010, 10:26 PM

I think NY State is too smart to let go of their share of the profits. You have established Nexus in NY State, all your business is derived within NY State, and for your information, I would check with your CPA who does your tax returns to determine whether the NJ minimum taxes would be substantial for your IT business, especially if you are going to maintain a NJ location.

As such, you would be subject to the NJ minimum corporation taxes along with NY minimum taxes as well! I think you would be find this quite expensive and you have to file a NY State tax return anyways as you are a resident of NY State and your business is being conducted from NY State.

Again, moving to DE or Nevada makes no difference to your situation! You must report all your income and source it to NY! Hence, you would be required to file a NY State tax return.!

computerguru · #3 (**permalink**) 04-11-2010, 10:37 PM

The idea is we would no longer be doing any business in NY, as this business operates out of home office, if I moved to NJ, and this operated solely out of NJ wouldn't the NY nexus be gone?

TaxGuru · #4 (**permalink**) 04-11-2010, 10:41 PM

But where is the business income being derived from, that is are you an IT consultant being paid from a vendor located within NY State? If that is the case, then the sales factor would constitute providing you with a NY nexus unless your future business income comes from NJ vendors!