Hit the Road Jack

Today TaxMama hears from Summit in the TaxQuips Forum, who has some questions.
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“When doing work nationally what are the tax implications? We are a painting contractor based in, say, New York, travel to Mississippi and paint a building for 50k, then travel to Alabama and paint a building for 50k and so on… what constitutes “doing business” in a state?”
https://taxmama.wpengine.com/forum/taxquips/national-work/


Dear Summit,

What constitutes “doing business” in a state? Exactly what you are doing. Being physically present is a big part of either ‘doing business’ or ‘being employed’. Go look at what happens to professional athletes. They may only play one game in a state and they have to file tax returns there.
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Imagine how many tax returns some poor quarterback in the NFL must file!

If you are a painting contractor, and you used the word ‘we’, that implies you also have employees.
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You may very well have to register your business in each state. You may even have to establish a payroll in each state. You may end up with tax returns in multiple states and issuing W-2s in several states to your various employees.
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(In fact, have you looked into CITY licensing and taxes?)

Get a good payroll service to help you with the various state payroll registrations. And talk to your tax pro about getting help with setting up shop in each state.

Incidentally, I just noticed you’re in NY. NY will tax all your income, regardless of where you work. Be sure you know how to get reimbursed for the taxes paid to other states.

Goodness, business IS complicated these days, isn’t it? But you have to go where the work is.

So, with this in mind, avoid the smaller jobs out of state – or subcontract them to someone local – and have them put YOU on payroll, if need be – how’s that for an idea?

And remember, you can find answers to all kinds of questions about working across state lines and other tax issues, free. Where? Where else? At www.TaxMama.com .

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