Virtual Wholesaling in a Different State

[Simon Abramov]

Hi all,

I am looking to begin virtual wholesaling properties in FL. My question is: would it be wise to form an LLC in a more tax-friendly state, such as Delaware or Nevada? If I live in NY, but I do not intend to do any business in NY, would I need to have my out of state LLC filed as a foreign LLC in NY?

Essentially, I am looking to form an LLC in Delaware, do wholesale deals in FL, all while residing in NY. I understand I would need to create a foreign election of the Delaware LLC in Florida, but I'm not sure about NY. Any recommendations on this, or what to stay away from, is greatly appreciated. Thank you.

[Sean Morrison]

Disclaimer: I am an attorney, but I am not your attorney. This is not legal advice, just friendly information.

Forming an entity outside your home state does not help much with taxes. For example, if you are wholesaling in FL but doing it from NY, you're still doing business in NY since that's where your office is. If you create a FL LLC, then it will need to register in NY as a foreign entity. The reverse is also true - if you're a NY LLC operating in FL, you'll be a foreign LLC in FL. If you create a DE LLC, then you'll need register it in DE, NY, and FL. That's a lot of additional fees.