Does an NY Scorp have to register in other states to hire a corp to corp?

May 27, 2011
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I am starting an investment management business in NYC. I am preparing to create my company as a wholly owned S-corp. I will be "employing" 2 other individuals, 1 in NJ and 1 in TX. Rather than putting them on payroll they would like to form their own S-corps and be contracted out corp to corp to save some money on payroll taxes. Will my S-corp need to register in those states in order hire contractor's there? My single client will be in NY, but outside of the city. I will be relying on my 2 contractors for research and technology support.

Would it be different if I decided to create my business as an LLC and contract out the individual S-corps? I was attempted to avoid creating an LLC due to more expensive registration costs in NYC as well the need to pay UBT.


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