Multi-state Income Taxes | Companies expanding into Georgia

Georgia US

In 2021, Georgia was named the best state for conducting business in the US, making it the eighth consecutive year to have the title. After gaining economic momentum despite the pandemic, the State of Georgia continuously brings more jobs and opportunities to Georgians.

Companies expanding into Georgia

When it comes to doing business in Georgia, established businesses including Google, have set themselves up in this state for reasons that make sense to the growth strategy of many businesses. Many businesses, find it favorable to expand into Georgia considering the lower corporate tax obligation in this state, and more: 

    • Georgia is headquarters to thousands of companies, making it a booming business hub.
    • The state’s advanced transportation infrastructure makes for smooth business operations within Georgia.
    • Georgia boasts many world-class universities, making educated professionals easy to source in this state.
    • The main reason many businesses do business in Georgia, is for its favorable corporate tax rate which hasn’t exceeded 6% for 50 years. This is considerably lower than for example the 8,84% obligation in California. Georgia also taxes are also based on one factor only – the sales a business makes inside Georgia. The state’s no “throwback rule” also means that double taxation for sales made in another state would not apply in Georgia.
    • Georgia boasts a number of established industries that other states would benefit from. This includes the state’s longstanding leadership in agriculture, being considered number one in the tech space, the state has among the strongest FinTech globally, and more.

  • S Corporations

    • Filing Requirements
      • All corporations that own property, do business in Georgia or derive income from Georgia sources are required to file a Georgia income tax return.
    • Allocation & apportionment
      • One Factor Formula: Gross Receipts
      • Market-based apportionment
        • Revenues received from customers within the state

  • Partnerships

    • Filing Requirements
      • A partnership, limited liability company, syndicate, group, pool, joint venture and unincorporated organization which is engaged in business or owns property located in Georgia or has members domiciled in Georgia or has income from Georgia sources, and which is required to file a Federal Income Tax return on Form 1065, is required to file a Georgia Income Tax return on Form 700.
    • Allocation & apportionment
      • One Factor Formula: Gross Receipts
      • Market-based apportionment
        • Revenues received from customers within the state

  • Employees & individual filers

    • Filing requirements
      • 1. Nonresidents who work in Georgia or receive income from Georgia sources and are required to file a Federal return are required to file a Georgia income tax return. 
      • 2. Legal residents of other states are not required to file a Georgia tax return if their only activity for financial gain or profit in Georgia consists of performing services for an employer as an employee where the wages for such services do not exceed the lesser of five percent of the income received from performing services in all places during the taxable year or $5,000. 
      • 3. A nonresident, who receives deferred compensation or income from the exercise of stock options that were earned in Georgia in a prior year is required to pay tax on the income, but only if the prior year’s income exceeds the lesser of 1) 5 percent of the income received by the person in all places during the current taxable year; or 2) $5,000. However, the income is not taxed if federal law prohibits the state from taxing it. Federal law prohibits state taxation of some types of retirement income including pensions as well as income received from nonqualified deferred compensation plans if the income is paid out over the life expectancy of the person or at least 10 years. See Regulation 560-7-4-.05 for more information. 

When Do You Need an Atlanta Tax Accountant?

Ensuring Accurate Tax Filing

Keeping a handle on these different laws and tax implications might be difficult for your staff members but can be accomplished by outsourcing a CPA. Allow an expert who deals with business structuring, accounting, and taxation regularly set up accounting software to factor in applicable tax laws for each US state.

Fusion CPA recently expanded into new states bringing us firsthand experience and knowledge. We have a team of certified public accountants who are highly skilled in handling multistate taxes. Our team of professionals understands the federal and state laws in various states and jurisdictions.

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This blog article is not intended to be the rendering of legal, accounting, tax advice or other professional services. Articles are based on current or proposed tax rules at the time they are written and older posts are not updated for tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided on this website is not all-inclusive and such information should not be relied upon as being all-inclusive.

 

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