My partner and I both reside in New York, but are looking to purchase our first investment property in Pennsylvania. Do I need to form the LLC in PA? Or is NY fine to do business in another state? Honestly, I would prefer to do register the LLC in PA but am not sure if I can without a physical address yet, am I right? Please let me know how this works!
You can register in any state, but you also need to register in the state you do business as a "foreign" entity. If you know you will invest in PA and no place else, you might consider registering your entity there, however you will need to have an in-state person to name as your local contact.
Our attorneys have always advised to establish an LLC in the state we are buying in.
Out of all 50 states whenever I bring up PA to my CPA he cringes. For some reason they make you jump thru special hoops when filing your taxes.
Form your LLC in PA it will be less of a headache come tax time and it will also cost less to setup in PA then in NYC.
I'm always a fan of setting up the LLC in the state where the property is located, though there is no requirement to do so. Sometimes people set up the LLC in Delaware, though in that case you will need to register as a foreign entity in the state where the property is located. If your LLC is filed in a state other than the one in which the property is located, you may also need to file multiple tax returns to the various jurisdictions.
However, if the LLC you are discussing here is your operating company, rather than the property LLC, definitely set it up in New York, so you don't have to then register as a foreign business in New York. But if you form in NY, you will have to pay to have the LLC published, and the cost differs on the county of registration. Before you form, make sure you talk to one of the professional publication companies first. They will help you minimize your publication costs.
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