LLC across state lines?

Question

I live in IL but looking to invest primarily in MO and other states in the future (IL property taxes KILL cash flow). I'd like to start an LLC for my properties. Does it matter if the LLC is registered in one state over another?

Eric Shadowens · Answer

Hello Ryan,

I highly suggest you speak with your tax advisor as well as an attorney.  Both will help you get your LLC setup and be able to instruct you on the nuances of having business activity in other states.  Generally, you'll be responsible for paying taxes in your home state on all of your income.  The income earned out of state is taxed in the other state as well.  You'll receive a credit on your home state return for taxes paid to other states.

An attorney will be able to guide you through setting up the LLC.  For example, here is a NOLO website link that explains doing business as a foreign LLC in Missouri.  Again, your attorney will be knowledgeable on getting you setup and how to get properly registered to do business in other states.

I have had many instances where one of my clients has told me of proceeding with out of state activity after the fact.  It's always worth a few extra dollars on the front end to get setup properly and have an understanding of potential taxes.  You may consider having your tax advisor run a projection of potential taxes on your expectation of income to make sure it's in line with what you are projecting for cash flow.

https://www.nolo.com/legal-encyclopedia/how-qualify-foreign-business-missouri.htmlGood Luck!