Rental Property Investor · Palm Desert, CA · Member since 2017 · 7 posts · 0 votes
I live in CA and have created a CA LLC. I own a 4plex in AZ and plan to buy more out-of-state properties. I am thinking about scrapping the CA LLC due to the high yearly ($800) annual tax amongst other things. Can I then create an LLC based in Arizona or any other state where I purchase properties, even though I live out of state? I am trying to avoid the heavy costs associated with California LLC's. I've heard that LLC's are not absolutely necessary, but I would feel better for tax and protection purposes to have all business monies separate from my personal monies. Thank you.
If you live in CA and are managing from CA, you cannot escape the $800 minimum tax. Even if you create an AZ LLC (or any other state), so long as you are managing from California, you are "doing business" in California according to the Franchise Tax Board, and therefore subject to CA taxes. If you want to form out of state, you will need to register as a foreign LLC in california.
*This post does not create an attorney-client or a CPA-client relationship. This post is informational only and readers are advised to seek professional advice.