Tax Planning for Expansion: Why Operations Should Drive Structure

David Brandon
Attorney, Tax

Abstract

When companies plan to expand, they often start with entity and jurisdiction questions—but David Brandon, a tax partner in the Boise office, explains why those are rarely the right first questions. Instead, businesses should begin by understanding how they create value, who will be involved, what those people will do, and what assets or outputs the business will generate.

The discussion emphasizes that operations drive the tax footprint, including compliance costs, risk, and long-term expenses. For legal and business leaders, the key takeaway is that effective tax planning starts with the business model itself. By clarifying personnel, activities, and value creation early, companies can make smarter structural decisions and position themselves for efficient growth over the next five to 10 years.

Transcript

I am David Brandon. I'm a tax partner in our Boise office, and my practice is focused on tax planning, so I'm usually involved with planning the consequences of significant transactions for businesses. Usually when a company is thinking about expanding, they're asking all sorts of questions, and usually the questions are things like, should I form a corporation? Should I buy up this company? Do I incorporate in Delaware or Nevada? All of these questions we get over and over and over again and they're really the wrong questions. The things that we should be talking about first and foremost is how are we creating value, right? What is the point of what we're doing here? Who do we have on the bench? What are they going to be doing? What inputs do they need? What are they creating? Is it intangible property? Is it real property, personal property that's going to be exported?

We have to understand the business itself and the operations, and the reason for that is because your operations—they always will drive the tax footprint. They're going to drive your tax compliance costs. They're going to drive your tax risk and your expenses. And so, if we start talking early about who are your people, what are they doing, how are they creating value, then that really informs the tax decisions. That starts us thinking along the lines of what's the most efficient way right now of getting you set up into whatever jurisdiction you want to be in, and then secondly, how is that going to affect the next five, 10 years of operations? How do we get you set up so that you can really go launch in the big way that everyone wants? And so, for that reason, we always say, nail your people. Nail what they're doing. How do we get value? If we can get that, we can make the tax consequences work.