Rental Property Investor · Las Vegas, NV · Member since 2018 · 15 posts · 11 votes
Hey all,
So I have someone who has a chunk of change sitting around and is interested in putting it to work. They've approached me, since I have a few properties already, and wanted me to do the grunt work (and maybe provide some, but not all of the funds).
I'd love to hear advice and experiences in different structures, as I know a bit but am far from an expert. The other potentially confounding variable is the fact that we reside in two different states, with me being in Las Vegas and her being in California. I know that Nevada is a lot more friendly as far as taxes go, but am not sure if her living in California would be a factor for just her, or if it would impede on the business partnership/LLC/etc, even if it's formed in Nevada.
Las Vegas, NV · Member since 2018 · 403 posts · 474 votes
5y
Few years ago there was a legal ruling for California residents who owned companies in Nevada. Said they must be able to prove that they did all of the work and even company meetings actually in Nevada and not remotely in California, in order to qualify for not paying CA state income tax. I don’t remember the name on that ruling.
But consult a tax professional and don’t take my non-tax-pro word for these things.
Investor · Marin County California · Member since 2018 · 1k+ posts · 2k+ votes
5y
Typically, LLC's and partnership have pass-through taxation, meaning that you will be responsible for your own taxes and your partner for hers. You should consult a CPA to make sure you get this right but it should not be a problem.
The possible structures are as various as your business relationship. Work out a term sheet first identifying what interests you each will have in the enterprise, what duties, how gains and losses will be split, how disputes will be resolved, etc. The structure that best suits your deal will typically emerge from these discussions.
Attorney · Slidell, LA · Member since 2016 · 322 posts · 179 votes
5y
Disclaimer: I am an attorney, but I am not your attorney. This is not legal advice, just friendly information.
When working with partners LLCs have a lot of advantages. The biggest is that you can create an operating agreement that outlines how you will work together. The other is that a partner's personal liabilities will not crush the partnership. California will almost certainly require an LLC to file as a foreign LLC doing business in CA, but that's just part of the price of doing business. And always use an attorney to create a multi-member LLC, or there will be problems down the road.