As a sole proprietor, you're generally only required to pay taxes in your home state or the state where you earn your income. This is because states typically don't have the authority to impose taxes on individuals who reside or earn income outside their borders. In simpler terms, they can't demand you to pay taxes if you're not living or working within their boundaries.
As an S Corporation, if your business operates in another state during the tax year, that other state will want to tax the % of income made in that state (even if you are a nonresident). This applies to S Corps that have moved within the year or perform business in other states.
Payroll Taxes
For payroll taxes, there is a withholding tax and an unemployment tax. Withholding tax is mostly based on where you live, and unemployment tax is where you work. Referring to the example above, you will pay NJ unemployment taxes and PA withholding taxes. Heard estimates are for income tax and W-2 is for withholding- even if you pay enough in withholding you still may owe in income taxes.
Moving States
Throughout the year, if you move and earn income in multiple states, keep track of how much income you make in each state that you are physically living in. There are also minimum income requirements for each state. So, if you make little income in one state, you may not have to file state taxes there. Generally if you make over $5,000 in one state you should start tracking how much you earn in each state. Most states offer a credit for taxes paid to another state, primarily to prevent double taxation.
Heard will request the percentage of your income by state for quarterly tax estimates if you moved during that quarter or you service clients in multiple states.
During annual tax season, your Tax Preparer will work with you on state taxes.