Does anyone have any suggestions as to which state I should for my LLC in. I have been recommended to use Nevada since they have a more favorable charging order ??? which I dont completely understand anyhow.
For out of state LLC's the favorites, by far, seem to be Nevada and Delaware.
It's been a while since I researched this. Nevada LLC's give you increased privacy and may give you some tax advantages. I don't remember why delaware corps are also favored. A few minutes on Google and I'm sure you'll know.
If the LLC is not registered in your state of residence (i.e., a foreign state) don't you need a registered agent in the foreign state? How much will that cost?
If the LLC is doing business in a state in which it is not incorporated, then you have to register your LLC as a "foreign corporation" in the state in which you are doing business. How much is the extra registration fee?
If the LLC does business in a foreign state, doesn't a tax return need to be filed in each state in which the LLC has income as well as in the state in which the LLC is incorporated?
Perhaps, someone could tell me why you would want to register your LLC out of state in the face of extra annual filing fees and multiple state tax returns.
Well these are the kind of questions I am rying to get answered... But one main question would be that will the extra cost be worth the added protection ?
Basically I live in CA I own properties in NV and OH. I want transfer title to an LLC. The question is where should I form the LLC. I am not doing business in CA just in these additional states...
I am a long term investor so will I need to file a foreign corp just to change title ?
Or can I form an LLC in NV and place on a title in OH. This approach has been recommended to me
I researched the topic you are researching and decided that my states' laws (Iowa) are very favorable for LLC's. The cost to operate a foreign entity is much greater than one formed in your home state. Charging orders and the ability to transfer property in and out of an LLC without transfer tax are the two main benefits I see. The latter is universal so it leaves the charging order as the important thing. There are only 4 states if I remember right that allow remedies other than charging orders. There are some differences but I felt Iowa took a good position so I used my home state.
I'm not sure this helps any but I would probably recommend to you to use a home state LLC for each property you own.
I was considering creating an LLC in OH and NV as well. But since I live in CA will I need to file as a foreign Corp in CA. I didnt think I needed to.
I was under the impression that just placing an LLC on title in another state would not require for me to file as a foreign Corp nor pay state taxes within that state. I thought since the passive income flowed to me personally then I can just continue to pay all of my taxes CA.
I have been informed that since all I have is rentals that each property should be own by its own LLC and that I should create the LLC in NV since they have most stringent bylaws in regards to piercing the corporate veil.
I have had the same question. Live in CA, but only have rentals out of state. I don't want to pay that annual $800 CA fee, and was not sure if they would just ding me anyway when I file my CA return if I form the LLC in the rental state. Currently have a question into my tax guy about that. Hopefully if the LLC is considered "disregarded" then there is no impact on our taxes here.
This is definitely a difficult question to get a straight answer on.
If you live in California (or any state), and want to file an LLC in any other state, then the registered agent for the LLC must be a resident of the state you're filing in. There's a company out there known as The Company Corporation that will set up a corporation or LLC on your behalf AND act as your registered agent for a year (all part of the orginial fee's...after a year, you pay them to act as your registered agent... a small fee). I'm not associated with The Company Corporation, but I did research them in my search for LLC rules/start up costs. California is NOT a real estate friendly state (when compared to others). Neveda and Deleware are the most popular states start an LLC or corp. for many reasons. If I remember right, there are more companies traded on the NYSE from Deleware than any other state and most of those companies do most of their business in other states. Nevada is a VERY real estate friendly state and if you're thinking of setting up an LLC to do so in Nevada for their charging order and privacy laws. I wont take up a lot of space with specifics, but you can find a LOT of useful information on www.nolo.com.
well if the wrongful act is something you knew about before hand and the courts find out, then they will tear down your LLC roadblock protection and use your personal assets to satisfy a suit.
If the wrongful act is something you did not know about and just "happened" or if there was an accident on your rental property and someone wants to sue you...then an LLC offers protection (a roadblock) of your personal assets, bank accounts, cars, houses, etc. In the event of an accident you should have liability insurrance for such things (everyone's sue happy in America). If you're insurrance doesnt cover the accident or is not enough to settle the suit, then the party who is suing you can only access the LLC's assets and not your own. I have a guy managing my property in Texas (as I live in Utah) and he is also an investor who has grouped his properties together in groups of 4 properties per LLC...sooo he has multiple LLC's each with 4 properties in the LLC's name. In the even of a law suit and his insurrance doesnt cover some or all of the claim, and the courts order him to liquidate LLC assets to satisfy the claim...his other properties are protected.
not sure if that helps...and again each state has their "own" LLC laws so things vary from state to state. [ Edited by Machine on Date 05/03/2004 ]
For out of state LLC's the favorites, by far, seem to be Nevada and Delaware.
It's been a while since I researched this. Nevada LLC's give you increased privacy and may give you some tax advantages. I don't remember why delaware corps are also favored. A few minutes on Google and I'm sure you'll know.
If the LLC is not registered in your state of residence (i.e., a foreign state) don't you need a registered agent in the foreign state? How much will that cost?
If the LLC is doing business in a state in which it is not incorporated, then you have to register your LLC as a "foreign corporation" in the state in which you are doing business. How much is the extra registration fee?
If the LLC does business in a foreign state, doesn't a tax return need to be filed in each state in which the LLC has income as well as in the state in which the LLC is incorporated?
Perhaps, someone could tell me why you would want to register your LLC out of state in the face of extra annual filing fees and multiple state tax returns.
Well these are the kind of questions I am rying to get answered... But one main question would be that will the extra cost be worth the added protection ?
Basically I live in CA I own properties in NV and OH. I want transfer title to an LLC. The question is where should I form the LLC. I am not doing business in CA just in these additional states...
I am a long term investor so will I need to file a foreign corp just to change title ?
Or can I form an LLC in NV and place on a title in OH. This approach has been recommended to me
I researched the topic you are researching and decided that my states' laws (Iowa) are very favorable for LLC's. The cost to operate a foreign entity is much greater than one formed in your home state. Charging orders and the ability to transfer property in and out of an LLC without transfer tax are the two main benefits I see. The latter is universal so it leaves the charging order as the important thing. There are only 4 states if I remember right that allow remedies other than charging orders. There are some differences but I felt Iowa took a good position so I used my home state.
I'm not sure this helps any but I would probably recommend to you to use a home state LLC for each property you own.
I was considering creating an LLC in OH and NV as well. But since I live in CA will I need to file as a foreign Corp in CA. I didnt think I needed to.
I was under the impression that just placing an LLC on title in another state would not require for me to file as a foreign Corp nor pay state taxes within that state. I thought since the passive income flowed to me personally then I can just continue to pay all of my taxes CA.
I have been informed that since all I have is rentals that each property should be own by its own LLC and that I should create the LLC in NV since they have most stringent bylaws in regards to piercing the corporate veil.
Another Thought... Can I get around all of this by Deeding my Properties to a Trust and then making my Nevada Corp the beneficiary ?
I have had the same question. Live in CA, but only have rentals out of state. I don't want to pay that annual $800 CA fee, and was not sure if they would just ding me anyway when I file my CA return if I form the LLC in the rental state. Currently have a question into my tax guy about that. Hopefully if the LLC is considered "disregarded" then there is no impact on our taxes here.
This is definitely a difficult question to get a straight answer on.
here's the deal...
If you live in California (or any state), and want to file an LLC in any other state, then the registered agent for the LLC must be a resident of the state you're filing in. There's a company out there known as The Company Corporation that will set up a corporation or LLC on your behalf AND act as your registered agent for a year (all part of the orginial fee's...after a year, you pay them to act as your registered agent... a small fee). I'm not associated with The Company Corporation, but I did research them in my search for LLC rules/start up costs. California is NOT a real estate friendly state (when compared to others). Neveda and Deleware are the most popular states start an LLC or corp. for many reasons. If I remember right, there are more companies traded on the NYSE from Deleware than any other state and most of those companies do most of their business in other states. Nevada is a VERY real estate friendly state and if you're thinking of setting up an LLC to do so in Nevada for their charging order and privacy laws. I wont take up a lot of space with specifics, but you can find a LOT of useful information on www.nolo.com.
~T
here's a good article that might help answer your questions...
http://www.traderstatus.com/chargingorders.htm
machine, this seems more in relation to libility for your debts, versus liability if someone sues you for a wrongful act.
Does this all apply if wrongful act liability is the primary concern.
well if the wrongful act is something you knew about before hand and the courts find out, then they will tear down your LLC roadblock protection and use your personal assets to satisfy a suit.
If the wrongful act is something you did not know about and just "happened" or if there was an accident on your rental property and someone wants to sue you...then an LLC offers protection (a roadblock) of your personal assets, bank accounts, cars, houses, etc. In the event of an accident you should have liability insurrance for such things (everyone's sue happy in America). If you're insurrance doesnt cover the accident or is not enough to settle the suit, then the party who is suing you can only access the LLC's assets and not your own. I have a guy managing my property in Texas (as I live in Utah) and he is also an investor who has grouped his properties together in groups of 4 properties per LLC...sooo he has multiple LLC's each with 4 properties in the LLC's name. In the even of a law suit and his insurrance doesnt cover some or all of the claim, and the courts order him to liquidate LLC assets to satisfy the claim...his other properties are protected.
not sure if that helps...and again each state has their "own" LLC laws so things vary from state to state. [ Edited by Machine on Date 05/03/2004 ]