Home Questions Multi-state tax when an LLC owner works remotely
Wednesday • Asked by a McKinney LLC owner
My LLC is based in Texas and I have an offer to work remotely from Tennessee for six months. State tax implication?
A full answer from Michael R. Cowell, CPA, EA, CFE. The kind of question that comes up on a first call, written out the way I would explain it.
The short answer
The good news is both Texas and Tennessee have no personal income tax, so a temporary move between them is unusually clean. The thing to watch is your LLC, not your salary: working from another state can create nexus, meaning a filing or registration obligation, depending on what you do there. For a solo owner doing remote work, the exposure is usually low, but it is worth checking before you go.
The personal side is the easy part
Most multi-state questions are messy because the worker has to split income between a home state and a work state and file in both. Texas and Tennessee both have no broad personal income tax, so that whole layer disappears. As an individual, moving your laptop from one to the other for six months does not create a new personal state return.
The business side is where to look: nexus
A business is a separate matter from its owner. A business creates nexus, a connection that triggers tax or registration duties, in a state by having people, property, or activity there. When the owner-employee of an LLC physically works from Tennessee for six months, the activity of the business is, for that period, happening in Tennessee. That can be enough to create an obligation for the LLC even though the owner personally owes no Tennessee income tax.
What Tennessee specifically can ask for
Tennessee does not tax personal wage income, but it does impose tax at the business level and has its own registration regime. A business found to have nexus there can face registration requirements and business-level tax filings. For a single owner doing remote knowledge work, with no Tennessee customers, no Tennessee hires, and no property, the exposure is usually at the low end. It is not automatically zero, which is the point of checking rather than assuming.
Texas does not go away
The move does not switch the LLC off in Texas. The Texas franchise tax still applies to the entity, and the LLC stays registered and compliant in Texas throughout. The Tennessee question is something the trip can add, not something it replaces.
What to do
- Define exactly what the business will do in Tennessee: only your own work, or also hiring, contracting, or selling there.
- Check Tennessee registration and business-tax thresholds against that activity.
- Keep the Texas LLC fully compliant, including the franchise tax, while you are away.
- Document that the arrangement is temporary, with clear start and end dates.
This is general guidance, not advice for your specific situation, and it is current as of when it was written. Tax law changes and the right answer depends on your full picture. That is what the first call is for.
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