Register as a foreign entity or start a corporation

You are going to need to discuss many aspects of your business and your future plans with a knowledable attorney or accountant  in order to arrive at the right answer. California imposes a 10.4% income tax on regular C corporations and a 1.50% tax on income of even S corporations. Most states have lower rates and no tax on income of S corporations. So you are probably going to end up forming a new non-California entity for your non-California business. You will probably keep the California entity for your California clients and customers, so only the revenues from them will be taxable by California. Depending on your exit strategy, who you might sell the business to, you might want to be a Delaware corporation. Depending on the number of investors, you might prefer to be a Delaware limited partnership or limited liability company. Depending on how much exposure there is to the general public, might also recommend a Delaware entity, maybe a corporation, but maybe an LLC. Every time my clients by or build a new property, we set one or more new entities to own and possibly to operate it. As a result, I go through this calculation with my clients all the time. If you would like to discuss what entity you should use for your new Texas location, please call me at 510-286-2200 or email me at ds@sackrosendin.com. To learn more about my law firm, go to www.sackrosendin.com Dana Sack