Forming My LLC

[Lou Croce]

Hello all and here's the scoop,

I plan on forming an LLC with my father. Hes in upstate NY, and Im here in South Jersey. I plan on getting my first rental properties in upstate NY closer to my father because the areas/properties in the areas Im looking into there are cashflowing like crazy. SOOOO, should I form the LLC here in Jersey or there in NY? and does it matter that the 2 members of the LLC are in 2 different states? Any input would be greatly appreciated!

[Lou Croce]

Wheres the love? :lol:

[Richard Warren]

If it were me I would form the LLC in the state where you were going to be buying the properties.

8)

[N/A N/A]

yes thats the best thing to do.

[Joshua Dorkin]

I'd also go with an LLC in the state the property is located in.

[James Miller]

Not all state's LLC statutes are created equally. You should be considering Nevada, Texas, and Delaware too.

[Linda Weygant]

Holy Old Thread Resurrection, Batman!

[Jim Horne]

I'm currently living in California but seeking property in the North or South Carolina area due to much more favorable cash flow properties in those states and proximity to my family. California requires that I "register" here regardless of whether I form in North or South Carolina. I'm also being told that I have to file as a foreign business entity. Any tips with respect to whether it is more advantageous to file in California and register as a foreign entity in the state I'm buying property in, or file in the state I'm buying property in and register in California. No matter what I do, I'm told I must be affiliated with California because of state law here, and I cannot get out of the California Franchise Tax Board fee (~$850/year). One factor I think is important is the "registered agent" for the LLC, which in North Carolina's case must actually live in North Carolina (which I do not). I think I need a lawyer....

[Tyler Watts]

Yea contact an attorney. NC will want you to provide an address within the state that is your business address. It can be your primary house if that is where the business is. Attorney is your best route and you'll likely have to contact on in Cali and one in Carolina. I've got some in NC that can help you with that side of things. PM me and I'll shoot over there contact info. 

[Jessica Zolotorofe]

Your accountant can probably give you the best advice. You don't need a business asdress within the state of formation, only a registered agent. There are tons of companies that do it for a small fee.

[Jim Horne]

Thanks Tyler and Jessica. Tyler I just PMd you.  I'll speak with my accountant today.

[Jeremy Brenner]

Hi Jim - I'm in a similar situation (living in CA, looking to invest in OH with my Dad and brother who live there). Did you learn anything from your accountant that you can share here?

[Peter Mckernan]

@Lou Croce

You can form the LLC in the state that you are buying the property, or in New Jersey. Look to see the best position and protection for the LLC as @James Miller mentioned those three states would be a good option too! 

I would do some research on all five of those states and also discuss with an attorney to make your final discussion.

[Jim Horne]

My apologies for not posting sooner. After speaking with an attorney in NC, it became clear that for my situation it made sense to form an LLC only in California. Regardless of where else I formed an entity, California would require me to foreign register with them and would require what they call a franchise tax board fee of $800 per year. NC law only requires you to register if you are performing active business in the state (i.e. have employees and create W-2s), and passive real estate investment does not meet the provisions of that statute requiring registration. Given the complexities of forming in NC (I would need to have a registered agent living in NC, pay fees for the LLC, etc) and no need to per statute, it only made sense to form in CA. Hope that helps. It is all very state specific and unique to your particular situation so I recommend you seek a professional opinion first.

[Cliff H.]

Thanks for the update @Jim Horne. Currently looking into this same situation and had always been under assumption that most states required the local resident agent and a "doing business as" registry, which we effectively a similar cost as just registering one's LLC in that state anyway. Clearly some major differences across state lines, which one should assume anyway. Appreciate the sharing of XP here!

[Brian Bradley]

@Lou Croce I would talk to your CPA and see where your takes make the most sense. No it does not matter that 2 members of an LLC live in different states. Business partners live all over the US and world. When you set up your LLC or Series LLC or any holding company have your Attorney draft it and your Operating Agreement for you. IF you wan to talk further I am an AP Attorney, just IM me.

[Umang G.]

Newbie here myself but most people advise that its best to form an LLC in the state you're buying a property, however your attorney and/or accountant could probably give you the right answer depending on your situation and investing goals.

Curious to know where in upstate NY are you looking to buy?