Sanger and Manes LLP Logo

E-COMMERCE / BUSINESS SITUS PLANNING

fixed-fee consultations




SANGER & MANES​​
FIXED-FEE
E-COMMERCE
BUSINESS SITUS
PLANNING





The digital economy allows increasing numbers of companies to operate in any state, even from outside of the United States, and still have access to California’s large and lucrative market.  Depending on the nature of the enterprise, and the structure of the entities used, choosing a business situs outside of California can often result in significant tax savings, especially if the goal is an IPO or other business sale. 

Of course, the possibility of reducing state income taxes through situs planning hasn’t been lost on California’s tax authorities.  Typically, California has taken an aggressive stance, casting a broad net over the activities of out-of-state corporations and pass-through entities (LLCs, partnerships, S corporations) by employing a definition of “doing business” in California beyond being physically present through in-state offices or operations.  Instead, California follows the concept of an “economic nexus,” based on factors such as sales, payroll, and inventory.  As a result, many out-of-state companies that historically have not paid California income tax have found themselves swept into California’s tax regime.   

Despite California’s aggressive position, careful, early structuring of in-state and out-of-state entities, as well as the legal residency of owners, can produce tax savings, especially if the goal is to sell a successful start-up.  

Sanger & Manes has decades of experience in situs planning for businesses and owners situated out of state, or planning to move operations across the state line, involving high-end transactions in the eight-figure to nine-figure range.  The firm offers fixed-fee packages for analyzing a company’s options for limiting tax exposure to California while having access to its market, and for structuring entities to minimize California taxes upon sale. 

Contact us for details.