I'm just starting out and am about to form a LLC. My home state doesn't seem to have the most favorable LLC laws. I'm thinking about forming a LLC in another state but have a couple questions concerning the matter?
Do the state laws where you do business take precedence over the state laws where you formed your LLC? Are there any tax implications for forming a LLC in another state? If it can be more favorable to form an LLC in another state, does anyone suggest a good state that has excellent LLC protection?
Thanks in advance for the thoughts.
By and large where you form your LLC does not matter because most states will expect you to register as a "Foreign Entity" if you operate there. This blows holes in things like Nevada LLCs which are supposed to provide privacy.
Depending on your state there may be advantages to forming elsewhere, but don't count on it.
Since you are in Maryland don't waist your time. YOu must register as a foreign entity and file the personal property return every year = $300+. As far as I can tell there is no advantage to creating elsewhere. It will only increase your cost.
For others, Delaware, Nevada and I think Wyoming are states to consider.
Ned Carey, Crab Properties LLC | http://baltimorerealestateinvestingblog.com/
As Ned had said it doesn't much matter where you for the LLC as long as you register as a "Foreign Entity".
My main reason for commenting though is because I know that Missouri has some of the best policies with their LLC's in the way of privacy and protection for you and your assets.
For more information about forming an LLC in Missouri see the attached link! Best of luck to you!
Ned is spot on. Even though you might not too favorable on Maryland LLC laws, consider yourself "lucky" that Maryland does not have a publication requirement (very few states do, but typically, the publication requirement when forming an LLC is one of the biggest expenses, just ask folks forming LLC's in New York City about that one).
Ask your attorney or cpa. It does matter where you form your LLC. Every state is different in how they deal with LLC's so why wouldn't you want to know from the guy/gals who file them every day?? What if your sued? What about your assets? What about tax implications? Does your state make you file foreign corp status if you buy real estate? Some don't!!!!! Maybe you should have two LLCs, one in state and one out for different holdings and money transfer. Every state will be different so ask a pro.
An LLC is a pass through entity for taxes and has no effect at all on taxes, unless you choose special tax treatment.
Either form the LLC in the state where your property is located (I'm assuming you want the LLC to hold properties) or form it in some other state and register it as a foreign LLC. Not surprisingly, the fees to register a foreign LLC are often the same as actually forming the LLC, so, IMHO, its nonsense to form the LLC in a different state than the properties.
Jon Holdman, Flying Phoenix LLC
Good advice in this thread.
I always recommend sitting down with your estate planner and CPA for these issues. Laws vary from state to state. In addition, we here do not know all of your asset or financial situation so it is best to have a discussion with someone that does.
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