Hello,

I will be doing some consulting work in NJ and I have a permanent residence in NC.
I am considering incorporating in NC with an LLC? Is that the right way to go in terms
of paying taxes? or shall I create the LLC in NJ?
Or does it matter? I presume I have to pay taxes in NJ under my LLC in NC correct?

thanks very much

Bill

As a NC resident you have to pay taxes on all your income. Any income earned in NJ is taxed by NJ, and you will be able to claim a credit for most, if not all, of the taxes paid to NJ on your NC return (so you are not double taxed). If you incorporate you are going to run into payroll issues. If you work in NJ you may be required to withhold NJ income taxes for the work done there. Work done in NC (if any) would be subject to NC withholding. The W-2 would show the gross earned in each state. Also the NC corporation is going to be required to allocate any net income between the states using the appropriate factors usually sales, payroll and equipment. If you only work in NJ it may be best to form a corp in NJ, then you will only have a NJ W-2 and a NJ corp return form. It may be simpler to form an LLC and stay as a sole proprietor.

You should obtain professional advice before making any final decisions. Otherwise you may wind up with something you don't want.

I am not that familiar with NJ so it may be different than described above.

If you are present in a state, then any income earned during this period, must be reported to the state.

To your resident state, you must report your worldwide income for the year.
Read: Your U.S. Tax Return: Working or Living in Two or More states (http://taxipay.blogspot.com/2008/06/working-in-two-or-more-states.html)

Thanks very much to both MukatA and MLSNC-- very helpfull!!

Bill