I'm a solo lawyer with an S-Corp (registered in CA), and pay myself a reasonable salary (W-2) and take a draw for the profits (K-1). If I move out of state, *all* of my work will still for CA clients/cases, though remote.
If I "domesticate" (i.e., move the S-Corp state of incorporation) in my new state, it seems like still be required to do register in CA as a foreign corporation and pay CA franchise tax (1.5%) on my entire revenue. I think this is because all my revenue would have an "economic nexus" to CA. Is that correct? If so, I might as well just leave the corp as an S-Corp, right?
But if I'm completely residing out of CA, would I have to pay CA personal income tax on my salary and the draw? I think I would *not* have to pay CA personal income taxes on the salary (and the business would not have to pay CA state payroll taxes on that salary) because I'd simply be a remote out-of-state employee of a CA corporation. And I'd think that I would *not* have to pay income taxes on the K-1 draw because I'm a shareholder who resides out of state. Is that all correct?
Thanks so much. This is a bit confusing, and I'd appreciate a sanity check.
[Reposting from
https://forums.dansdeals.com/index.php?topic=117141 per suggestion in that thread]