Business Tax Locations: Why It Matters Where To File Your Return

Whether you’re starting a new business or looking to expand a current one, considering the IRS implications of where you decide to locate is absolutely vital. Although federal charges are not likely to change much from state to state, local regulations and fees can be very different.

Local vs. Federal

When an individual pays the government, they are actually paying at least two different entities. On the one hand, the federal government is receiving money which is withdrawn according to rules that apply in the same way to all people in the same category. For example, people who make more than $50,000 a year with the same life circumstances, history, and employment will have the same amount withheld and will end up owing the same.

At the state level, however, things are quite different. Many fees are strictly imposed at the state level and can be higher or lower depending on what the local government decides to impose. It is this situation that makes it so important for companies to do their research before deciding where to establish their headquarters or where to expand.

Understanding Favorability

The main element of a good place to do business is the tax rates imposed on the type of corporation you run. All states have the right to set their own rates, which means they will have inherent variation. The best way to determine the most favorable locations is simple: talk to a regional specialist. If you have complete freedom to choose from anywhere in the US, consider talking to someone who specializes in business relocation and startups.

On the other hand, in many situations, businesses will find themselves relocating with little choice as to where to go. If you’re limited to a certain region, consult regional experts to learn about the area and decide the best course of action from there. Despite common geographic features, differences along a border can be quite pronounced.

Incentives and more

Tax locations are important, but they are not the only important consideration. If your business can bring dramatic benefits to the local economy, consider talking to the nearby government. They may want to offer incentives, especially to manufacturing and other industries that employ multiple workers. One of the main objectives of all policymakers is to stimulate economic growth within the regions for which they are responsible. If you can help them achieve this, they may be willing to help you create a favorable environment for that.

Also, some may have agreements in place for a long time. For example, special credits or other breaks can help put a location at the top of the list. Learning about this may require a consultation with a local expert, so be prepared for their questions.