While many Michigan residents will complain about the approaching harsh winter weather, we are fortunate because dealing with snow is nothing compared to coping with the devastation caused by the recent hurricanes. Personally, this winter I will be extra thankful as snow only makes travel more difficult, where those who live in the southern part of the country were not that fortunate this hurricane season.
Fortunately, in the aftermath of such events, there are those people and companies that are willing to lend a helping hand to rebuild in addition to making a reasonable profit for their time. I have spoken with numerous construction clients, and some are considering sending their crews to Florida and Texas to help with the rebuilding process. And while I commend their efforts, I also tell them to pump the breaks before starting such an endeavor. I’m not saying they should cancel their plans, but to consider the tax implications of doing business in such states. Planning ahead can help you rebuild the destroyed communities while keeping your incentives in your pocket and not in the government’s.
Whenever you are considering doing business in another state, you should start with researching the tax implications of doing business in that state for the entity type under which your business operates. Once you have become comfortable that you understand the tax implications and have decided you will begin operating in that state, you should begin the process by registering to do business with the Secretary of State to ensure that you have the legal authority to transact business within the state. The next steps are determining which types of taxes apply to your operations, determining the compliance requirements for each tax type, and then registering for those taxes.
Proper planning and knowledge related to state and local taxes are imperative to the long-term success of your business. Consulting with your Yeo & Yeo tax professional is a great first step in making sure you’re setting your business up for success.
If you are interested in donating to existing charities for hurricane relief, or donating via crowdfunding sites, you may wish to read Yeo & Yeo’s article, Crowdfunding Donations: Tax Deductible or Not?