Incorporate an online-based business in New York or Pennsylvania
February 18, 2014 3:44 PM   Subscribe

I'd like to start on online-base media/information/advice business, and I'm having trouble deciding on where to incorporate.

-Live in NYC.
-Family and friends in Pennsylvania.
-Would eventually like to move to Philly metro.
- Don't won property in either.
-Business would have no physical product (no products to be housed).

-Costs to legally create LLC in NY are $800-$1000 and involves being published in various newspapers. In PA, I think it's $75 to start an LLC.
-I believe the foreign business license in NY is $225, but the publishing requirement stands if you still want to do business in NY.

-Costs of creating a C-Corp (NY Doesn't recognize S-corps) is basically a wash between the two.

So here's the question...
- Is there any reason I shouldn't found my business in Pennsylvania?
- I'm guessing any distributions/payments would be taxed at "wherever I live" rates. What about any losses?

*BONUS QUESTION: What if I start a non-profit instead of a for-profit business?
posted by NYC-BB to Law & Government (4 answers total) 1 user marked this as a favorite
I am not an expert or a lawyer or an accountant. But thoughts: Aren't you going to have to pay taxes on the personal income in NY and on the personal income and the business' income in PA if you live in NYC and own a business in PA? Check into that. It doesn't seem particularly worthwhile if you have to pay taxes twice on any income.
posted by limeonaire at 4:12 PM on February 18, 2014

Best answer: This is really so situation-specific, that you should meet with an actual attorney in one or both jurisdictions.

Many people do not do publication until they want funding or want to sue people, so you may decide it's not necessary for you. There are also work-arounds to the publication costs (like using a registered agent in Albany).

Just a clarification -- NY State recognizes S elections, NY City does not. You can be an S corp for fed/state purposes but not for city purposes. However, going with a C corp or S corp drastically changes your tax requirements (e.g., for C corp, you no longer have flow-through taxation, for S corp, you have to take a salary and deal with payroll tax compliance). This is why you should meet with an attorney, or at least a CPA.

I don't see how forming a non-profit will work if you plan to ever receive any income from this venture.
posted by melissasaurus at 4:13 PM on February 18, 2014 [2 favorites]

See also, from NOLO, re: the tax issues.
posted by limeonaire at 4:16 PM on February 18, 2014 [1 favorite]

Response by poster: Thank you, everyone!
posted by NYC-BB at 4:21 PM on February 18, 2014

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