Startup Q&A
What is the best state to incorporate a web-based startup?
CEO and Founder of Kruze Consulting
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I’m a Deloitte Tax alum, CPA, interim CFO, and I prepare 150+ startup (DE C-Corp) tax returns every year.
You’re business may be online, as most are these days. **Ultimately, where you actually pay taxes depends on where you have Sales, Property/Rent, and Payroll. ** This apportionment calc can be tricky, so you should consult with a CPA. Take these two examples, both of which are San Francisco based DE C-Corps:
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Company A is a software dev company and has it’s headquarters/payroll in SF and is a DE C-Corp. It files a CA and Federal tax return, but it also pays Connecticut Sales Tax because it’s sole customer is based in Connecticut (and CT for some weird reason taxes software dev!).
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Company B is an app company and has it’s operations in NYC and is a DE C-Corp. It has nationwide revenue, but the vast majority of its employees are in NY, NJ, and MA. It files a NY, NJ, MA, and Federal tax return.
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State & Local TaxesTable of contents
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