Is it worth creating a NV Corporation if I'm based in CA?

Question

We buy properties in various states and sell to people in different states and even countries, though we are located in CA. Obviously, CA isn't very business friendly, so I've heard other investors incorporate in Nevada. Thoughts? Has anyone done the same?

Bryan Zuetel · Answer

@Dallas Waldon, you have not provided us enough facts to help you with the decision.  However, as to the "doing business" in California the FTB minimum $800, the link below leads to FTB examples (page 4) of how the FTB defines "doing business."  Basically, you are "doing business" in California under the FTB's interpretation if you direct a management company from California, use a California address for tax filings, and/or maintain a California bank account.  If you can avoid fitting into those examples or into the broad definition of "doing business," maybe you could have a Nevada LLC while being a California resident and avoid California taxes.

https://www.ftb.ca.gov/forms/misc/3556.pdf

Katie L. · Answer

@Dallas Waldon

Because you are based in California and making management decisions from CA, you will be "doing business" in CA and therefore subject to the $800 minimum tax no matter where you create your LLC.

*This post does not create an attorney-client or CPA-client relationship.  Readers are advised to seek professional advice.

Matthew McNeil · Answer

Dallas, I recall reading a post a few months ago that people were moving away from NV to WY, but I can't recall the reasoning behind it.  Sorry.  This might help though;

https://www.myusacorporation.com/articles/delaware...

Sam Stout · Answer

You must seek residence in Nevada for the benefits to kick in . . .

Matt K. · Answer

No, any LLC is going to cost you 800 min to CA FTB.

Dallas Waldon · Answer

Thank you Matthew! Great article!

Is it worth creating a NV Corporation if I'm based in CA?

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