Are you relocating your business to another state?
This final article by Brenda Spandrio, The Declutter Lady continues our theme of business relocation. [NOTE: Your move will likely be different, but the information given here should help you with a move anywhere.] Thanks so much Brenda for sharing this post!
We recently moved our Washington state corporation from Washington to California and decided to maintain it as a Washington state corporation. We could have created a California corporation, but didn’t because we would have had to change our corporation name. In our corporation, my husband and I are the sole shareholders and only board members. Moving a larger corporation will have more hoops to jump. However, the information below will get you started.
1. Statement and Designation by a Foreign Corporation: Since we elected to stay a Washington corporation we had to register in California as a ‘foreign’ corporation. This required:
- A “Certificate of Existence/Authorization” from the Washington Secretary of State certifying that our corporation is active and in good standing with the state of Washington. This certificate had to be obtained from Washington before we could submit:
- A Statement and Designation by a Foreign Corporation
- We included a letter requesting to be qualified as a foreign stock corporation to transact business in the State of California
- A self-addressed stamped envelope and
- A fee (in this instance $105.00)
Within a couple of weeks or so, we received a Certificate of Qualification with our California corporate number. Corporations in California may have to pay a minimum $800 yearly tax to the California Franchise Tax Board. This corporate number is required before you can register with other California government entities.
2. Seller’s Permit: If you are going to purchase materials for resale from companies with offices in California, then you will need a Seller’s Permit obtained from the California State Board of Equalization (BOE). There is no charge for this permit but you may be required to place a deposit with the BOE depending on your declared monthly taxable sales. The BOE will also advise you of your reporting basis (yearly, quarterly, monthly), the reporting period and the due date.
If you wish to purchase goods for resale, your vendors will ask you for a certificate stating your Seller’s Permit number and the goods you intend to buy from them. With this form on file, they are allowed by the state to sell you those goods without charging you sales tax.
If you are selling goods for resale, then you will want to obtain a similarly signed certificate from your customers. You can get a form at http://www.boe.ca.gov/pdf/boe230.pdf.
There are other regulations concerning the seller’s permit and you should become familiar with them. Ignoring your sales tax obligations will result in heavy penalties and possible jail time. Be very clear as to whether your particular business is required to assess and pay sales tax to the state.
3. Employment Development Department (EDD): You must register with and obtain an account number from this department in order to pay applicable payroll taxes such as state income tax withholding, unemployment insurance (UI), employment training tax (ETT) and state disability insurance (SDI). This site has useful information on this.
If you’re a private corporation, any person who is a corporate officer and sole shareholder (or the only shareholder other than his or her spouse), may file a statement electing to be excluded only from State Disability Insurance (SDI) coverage for contributions and benefits, which includes Paid Family Leave (PFL). This form can be found here.
Once registered, the EDD will send you the necessary forms for proper filing. If you’re not in California, find out your state’s regulations in this area. If you are not withholding proper payroll taxes, you face losing your ability to conduct business – and jail time. States really frown on this behavior.
A key to running a successful business is to operate within the law with integrity. It doesn’t matter if you think the law is unfair or you are aware of somebody else who is “getting away with” not conforming. It’s YOUR livelihood on the line, so make sure you fully understand the requirements for doing your particular business in your specific state. Don’t rely on hear-say; speak to a professional CPA or business law attorney.
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Are there any specific business requirements within your state? Please share in the comments below!
Known as The Declutter Lady, Brenda Spandrio has relocated seven times in the last five years. This includes moving four businesses that she manages with her husband Angelo. In addition to helping solopreneurs organize their office space, Brenda is a freelance assistant who helps get all those pesky to-do’s out of the way so you can focus on making money instead of busy-work.
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