Where the money resides: Determining your residency in a state

Ro Williams
By Ro Williams

The 183 day rule is a major part of residency, but it makes it seem like you can only be a resident of one state. However, I just want to clarify that’s totally not true.You can also end up being a resident of 2 states…

Residency plays a huge part in whether you have to pay income taxes and file a tax return in a state. As an example,  I’ve laid out some of the rules for residency in California.

Full-time resident

According to the California Franchise Tax Board, a person will be presumed to be a California resident for any taxable year in which you spend more than nine months in this state.

A company that is incorporated in California is legally a resident of California.

Part-year resident 

If you lived inside or outside of California during the tax year, you may be a part-year resident. Part-year residents can be a business that started operating in California but maybe relocated to a different state sometime during the year.


A nonresident is a business that cannot be a resident or part-year resident. As a nonresident, you pay tax on your taxable income made in California. A good example of this is an e-commerce business selling goods. Based on factors including, but not limited to, income and business entity formation, the business may be required to file an income tax return.

States have different rules when it comes to residency. You should check your state(s) residency rules to confirm which type of residency your business falls under based on your business activities in that state.

Ro Williams
By Ro Williams
Ro Williams J.D, MBA, is a part of the tax research team at ComplYant, a technology platform offering business owners and entrepreneurs a simple way to manage tax rules and requirements. Ro is an experienced professional in the tax industry and has previously held positions at an International Law firm and Public Accounting firms.

Related posts

A florist talks to her client
How To's

How to determine if you need to file a state income tax return

It's important to figure out if you're required to file a state income tax return, and there are four factors that can help you determine if you owe taxes to a state.
Young entrepreneur smiles and sits at her desk while working at a tablet
How To's

How (and why) to test a business idea: 6 step process

Many entrepreneurs want to know if their business idea is viable. To do this, you need a process to vet and refine your business idea. This six-step process will help your test your business idea fast and affordably. You can start a successful business without doing this, but this process will improve your chances of success.
Business owner puts a for sale sign on his closed up shop
How To's

Closing up shop: Things to consider if you want to dissolve your business

Dissolving a business isn’t as simple as locking the door and throwing away the keys. Your business needs to follow specific steps like notifying all owners, liquidating assets, paying employees, and notifying the IRS. Follow these eight steps to ensure your business is legally closed.