http://www.kenniffonline.com/passive-profits-google/
California taxes – out of state s-corp?
I currently live in California (moving to Nevada next year). Single shareholder S-Corp in Nevada owner of the websites that generate passive income through Google ads. All mail is sent to the Nevada address, phone number, Nevada bank account. Web sites generate income without any work – and the domain hosting costs are self-paid through corporate bank account, however, I realize that a wage "reasonable" has to be paid and that all profits can not be paid out as dividends. I realize that I will pay California tax State income from wages and dividends. Two issues that I have very clear: 1) Since you will receive a salary or paycheck, and I live in California, this alone only involves the registration requirement of the s-corp in California as a foreign entity? 2) Is there anything that is necessary to inform California with a check for payment before filing of the W-2 tax return? The W-2 could be sent to the address in Nevada. Thanks for any help.
While income California residents all to you is taxable. That means the total income of the S-Corp, regardless of whether it is on the W-2 or K-1. If the S-Corp is not doing business in California (Legal terminology is a link), then you must register in the state for purposes of income tax. You may have to register because they are paying wage or salary, however. When you send W-2 form to Nevada while living in California, you are acknowledging that you are hiding something from California. If the state finds out, will be much harder for you to pretend that you made an honest mistake. Payroll taxes are a very unpleasant area to make a mistake. You should consult a local CPA or better yet, use a payroll service. (Paychex is relatively inexpensive for the service it provides.) Payroll taxes that are withheld, or should have been retained and not paid to the proper agencies can lead to business getting close. payroll taxes are considered "trust fund" taxes the money does not belong to the company, the money in trust for the government until the payroll tax payment deadlines required. Hope this helps. Gary
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