Opening an out of state LLC

[Ryan Holland]

I am interested in opening an LLC in order to build credit for future real estate investments. I've read online about the benefits of opening LLCs in Wyoming but I still have several unanswered questions.

1. If I open a Wyoming LLC and transfer ownership of my Texas property to the LLC, will I have to register the business in Texas? The goal of transferring title to the LLC would be partially for asset protection, but mainly to establish payment history and credit for future investments.

2. If I incur business expenses in California will I have to register the LLC in California? California appears to charge $800 for the LLC annual fee so I want to make sure I wouldn't be required to pay that.

3. How does the state income tax work for those living outside Wyoming? Will I have to pay California state income tax since I live in California and Wyoming LLCs are pass through entities? Would it be possible to keep the LLCs earnings in the LLCs bank account until I move to another state with lower taxes?

Once again, the purpose of the LLC is mainly to build business credit, so any input on how to accomplish that with minimal expense would be appreciated. I figured I could begin this process by transferring my mortgage (hopefully they will allow the transfer if I personally guarantee the loan) to an LLC and making consistent payments.

[Jerry W.]

@Ryan Holland, I know very little personally about CA law. It is my understanding that if you do almost anything in CA they will charge you the entity tax. Having it registered in WY won't help you escape the CA tax as far as I know. I would go over these questions with a CA accountant BEFORE you make any move to change things. Checking after a change may be unpleasant and very expensive if you guess wrong. I really like WY LLC laws but unless you are big enough to justify an LLC in Texas that is owned by an LLC in WY you might just register in Texas. The more layers you add the more expense you and time on book work you add. If you are netting $10 a month off your rentals maybe you need to move up to bettter protection, but if you are netting $1K a month in profit you might destroy your cash flow doing this.