California resident - Out of State LLC registration in CA.

[Jared Swofford]

Hello all,

I am a VERY new and green to REI. I know I am a ways off from pulling the trigger on my first property, but I am interested in rentals out of state. I am a California resident and would like some advise from anyone who is also a CA resident and has formed LLC's out of state.

Everything I have read and listened to is pointing me to use a WY holing LLC as a top level entity. That being said, I have also been informed that if I, as the single member, am managing said LLC from CA I will have to pay the $800 to CA anyways to register my LLC with the state.

My question is, Are there any loopholes to this? How are you currently handling out of state LLC's in CA?

Again, I am about 2 months into my research and wondering how feasible and/or reasonable a WY holding LLC would be as a CA resident.

Thank you in advance for your time and knowledge... 

[Gurbeer Sangha]

Hi Jared!

So excited to see other Fresno investors. As an investor myself, I have looked into all of these "loopholes" but none of them seem to actually work. California loves their tax money. It would be best to just bite the bullet and pay the yearly $800 to the FTB. It's a small price to pay for the big gains you'll get in your investments. I would wait until January to register a new LLC save a year of money.

I specialize in investors and also business formation. Let's grab a coffee sometime! 

[Jason Marino]

Hi Jared,

Something that you might think about using instead of an LLC, is a Delaware Statutory Trust. This is a Trust that has similar limited liability provisions to LLCs and is governed by statute. It works well as a Holding Company and has the ability to replicate itself into multiple cells, which can each hold an asset in itself. The Delaware Statutory Trust additionally avoids the need to pay the California franchise tax.

[Jared Swofford]

Quote from @Jason Marino:

Hi Jared,

Something that you might think about using instead of an LLC, is a Delaware Statutory Trust. This is a Trust that has similar limited liability provisions to LLCs and is governed by statute. It works well as a Holding Company and has the ability to replicate itself into multiple cells, which can each hold an asset in itself. The Delaware Statutory Trust additionally avoids the need to pay the California franchise tax.

 Thanks for the info. I will look into this.