San Luis Obispo Corporate Law Attorneys Announce Considerations for Expanding Business to Other States
-As concerns regarding COVID-19 ease, the economy appears primed to grow quickly business owners may be tempted to expand their business to states other than California. Some states are more friendly to new businesses, and opening a new office or plant in one of those states is tempting, but the San Luis Obispo corporate law attorneys from Toews Law Group, Inc. caution that moving too quickly may result in legal issues that can hamper business growth.
Expanding your business to another state is not as simple as merely opening a new storefront. Each state has specific requirements regarding what is required to qualify to do business within its territory. This is true for both traditional brick-and-mortar business and those that operate within the online marketplace.
More and more businesses are finding it easier to generate business without ever leaving the office in their home states. Because of online business growth, most states have laws that require out-of-state sellers to collect and remit sales tax and this means these states need ways to track those businesses that sell merchandise to customers in those specific states.
Whether opening a store or office in another state, owning income-producing property as a California company or selling merchandise online, most states, at the minimum require a business to register as a “foreign entity” with that state’s secretary of state. That should be easy, right? Just look up a state’s requirements and file all the proper paperwork.
Not necessarily. The San Luis Obispo corporate law attorneys advise that each of the common business structures described below are treated in different ways:
- A small online business that draws customers from other states through recommendations from friends and family, exposure on social media, and Internet searches.
- An online consulting business that offers services instead of merchandise.
- An online-based retail business that actively markets in other states.
- A business opening a physical store, office or manufacturing facility in another state.
The best strategy for each of these businesses is different. Specific questions need to be asked and answered before moving forward with qualifying as a foreign entity with that state’s secretary of state.
- What is the best strategy for a small online business with unpredictable out-of-state sales to handle paying that state’s sales tax? Is adding a commercial “shopping cart” to the website that handles all of the various sales tax the best strategy? Are there other legal solutions?
- Does an out-of-state consulting service need to register with the state of residence for each client? Do those states have a sales tax on services?
- What is the best strategy for a large online retail business to accurately pay each state’s applicable sales tax?
- When opening a physical presence in a new state, what are the permit, license and zoning regulations for the new area? Is a fictitious business name (DBA) required? What are the employment laws, payroll taxes and insurance requirements?
And finally, once all these questions are answered, what is that state’s registration requirement? What forms need to be completed, fees paid, are there bond requirements, who will serve as agent for service of process? A consultation with a qualified attorney such as the San Luis Obispo corporate law attorneys is going to answer these, and more, questions.
In short, there is a lot of planning that needs to happen before making expanding to another state. Growing your business is a good thing, but you also need to make sure that the growth and expansion happens in as trouble-free a manner as possible.
The San Luis Obispo corporate law attorneys at Toews Law Group, Inc. are proud of their ability to help with a wide range of corporate law services. Corporate and business law are an overarching body of law that applies to people and companies engaged in business. Before starting a new business, or expanding an existing business, a consultation and review of all of the relevant aspects of the business in question is a solid strategy. Trust the attorneys at Toews Law Group, Inc. to ask the right questions and to provide the best legal guidance for reaching business goals.
This information has been prepared by Toews Law Group, Inc. for informational purposes only and is not legal advice. The transmission of this information is not intended to create an attorney-client relationship. Contacting us does not create an attorney-client relationship. Consult an attorney for advice regarding your individual situation.
Toews Law Group, Inc.
1212 Marsh Street, Suite 3
San Luis Obispo, CA 93401