Me and my S-Corp are in Texas. Does the S-Corp have to move with me to Wisconsin?

Discussion in 'Legal Issues' started by kontrabass, Apr 8, 2011.

  1. #1
    I've got my web-based business registered as an s-corporation in Texas where I reside. I'm the only employee and the corporation president. I'm planning a move to Wisconsin, which obviously has much higher corporate franchise taxes (we pay $0 in Texas).

    Since this is a web-based business with no physical storefront, can we just keep it registered in Texas (pay someone to act as a registered agent in TX), and therefore not deal with Wisconsin taxes? Or am I being way too optimistic? :)

    I've been reading up on "foreign corporations" in Wisconsin (which we would be, if we remained incorporated in TX and did business in WI). Foreign corporations pay the same franchise tax in WI. But again as this is an internet company with no storefront, can I just not deal with WI at all?

    http://www.revenue.wi.gov/faqs/ise/crpginfo.html#corp2

    Thanks!
     
    kontrabass, Apr 8, 2011 IP
  2. mjewel

    mjewel Prominent Member

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    #2
    You need to register (and pay a fee) to register a Foreign (out of state) Corporation in the state of Wisconsin. It doesn't matter that you don't have a storefront - you are accessing or operating the business in the state.
     
    mjewel, Apr 8, 2011 IP
  3. kontrabass

    kontrabass Well-Known Member

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    #3
    Couldn't one argue that I'd simply be working for a Texas corporation, in Wisconsin?
     
    kontrabass, Apr 9, 2011 IP
  4. mjewel

    mjewel Prominent Member

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    #4
    No, you no longer reside in Texas. You are performing business duties, accessing the internet/websites, banking, phone calls, even mailing your tax returns, etc., from the state of Wisconsin.
     
    mjewel, Apr 9, 2011 IP
  5. Business Attorney

    Business Attorney Active Member

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    #5
    I think that, to some extent, you are asking the wrong question. In most states "franchise taxes" are fees that corporations pay based upon their capital structure. In Wisconsin, the "franchise tax" is a tax on income and is in lieu of an income tax. They also have an income tax on corporations but you only pay one or the other. However, Wisconsin does recognize S corporations as pass-through entities.

    The relevant issue is that Wisconsin has a personal income tax and Texas does not. So the question you should REALLY be asking is whether the income from your business that is reflected on your federal Form 1040 is treated differently on your Wisconsin tax return depending on whether your corporation is qualified as a foreign corporation in Wisconsin or not. Assuming that you are the one personally running the business, the answer is likely that your income is taxable in Wisconsin. However, you should talk to a tax accountant or tax lawyer who is familiar with the application of Wisconsin tax laws.
     
    Business Attorney, Apr 11, 2011 IP