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This is Misconception Monday, where we tackle common misconceptions in business law, business and society generally. This week, we’re touching on business law.
You’ve probably heard that you can save money on taxes by incorporating in a different state than where you live. That’s broadly incorrect.
You pay tax where you earn the income.
States like Nevada and Delaware like to emphasize that they don’t charge corporate tax. But, you’re going to pay income tax where you earn the income. In fact, by incorporating in a different state, you’ll have to file as a foreign corporation and end up having to pay more filings. So, you’re really creating more work and expenses for yourself in a fruitless pursuit to pay fewer taxes.
Now, large companies with intellectual property or intangibles like patents do stand to benefit from creative structuring; however, small and even medium sized businesses don’t see benefits by seeking to incorporate in Delaware or other, similarly attractive states for tax purposes.
Watch the video for more detail, and contact me with any questions!
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For a deeper dive into and other legal issues vital to the success of your deals and your business, visit me at:
http://www.cenkuslaw.com
Just starting up? Check this out for my advice on startup success: http://www.thestartupshepherd.com.
You can also reach me at:
https://www.linkedin.com/in/brettcenkus
http://www.cenkuslaw.com
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About me:
My 20+ years of experience in business finance, business law and entrepreneurship have led me to believe that numbers and logic are awesome tools, but understanding human nature and emotions is the first step to business success.
The Cenkus Law Firm provides services related to mergers & acquisitions, general business issues and startups, including founders’ agreements and fundraising. I also consult with entrepreneurs and have invested my own capital as an angel investor.
From 2010-2013 I served as Chief Legal Counsel of a publicly-trade international oilfield services company. From 2001 to 2006 me and a partner founded and built Paragon Residential Mortgage. Paragon was sold to Bridge Investments in 2006.
I hold a Juris Doctorate from Harvard Law School and a Bachelor of Arts degree in Economics from Messiah College in Grantham, Pennsylvania.
Now, I live in Austin, TX with my wife and two kids. I enjoy reading, running, classic movies, great food and wine and some great American football.
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