Businesses have long chosen to headquarter in California over other states. But since 2018, many large corporations have moved their headquarters out of state, including Tesla, Oracle, and Nestle. The change is undoubtedly driven, at least in part, by the state’s expensive cost of living, high taxes, and complex regulatory environment.
While large corporations have the legal resources to navigate moving elsewhere, small businesses are often left wondering: What does it take to leave California? This article walks through five key steps to move your business out of the Golden State.
In general, moving operations out of California protects your business income from California income taxes. However, the California Franchise Tax Board may be able to tax at least some of that income if the business is registered in California, its income is derived from in-state sales or services, or the legal entity is a pass-through entity for tax purposes (e.g., a partnership) and the resulting pass-through income is recognized by one of the business’s owners based in California.
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