Can I start an LLC in a State that I do not live in?
I live in Chicago IL and have been looking up getting an LLC. A few real estate investors have been telling me to get my LLC though Nevada?
Is this a good idea? Are there more benefits to having my LLC in Nevada even though I am selling and buying in Chicago?
YOu can set one up there, but in Illinois you need to be registered in Illinois as a business. SO if your Nevada LLC does biz in Illinois your Nevada LLC will have to register as a foreign entity (foreign as in not in IL). So you are still subject to the taxes and laws of Illinois, so sort of defeats the purpose of Nevada, doesn't it?
The reason for a Nevada LLC is because of the ease of creating a series LLC, or carrying LLCs under one main LLC. This has started to become easier to do in many states, so you may want to look into what Illinois has for creating that structure. *********** is correct in the foreign LLC registration if you have an out of state LLC. He is also right if the purpose is tax related. What type of investing do you plan on doing? If you are buying and holding, you "may" consider a series LLC for each property; however, you have to look at the cost and weigh the benefits. Depending on how you are going to be operating, it may make more sense to just take out a large enough umbrella insurance policy. These are typically less expensive than forming an LLC, and they "could" provide you with the coverage you need. You just have to make sure all of your ducks are in a row. Good luck to you!!
We have series LLC here in Illinois.
Ryan Siriann
not an attorney or a CPA, and you may need advise from both. If you are doing business in a state, in my non-attorney/CPA opinion, then the entity should be from that state.
There are many issues that need to be considered including taxes, state and Federal as well as liability. I've heard people say, well if I have a Nevada LLC and I have a slip and fall, they'll have to sue me in Nevada. Wrong, Perry Mason, the injured party will sue you in the state where the accident happened even if you have an out of state entity and you will have to comply with the laws of the state where the accident occurred.
I'm quoting Clint Coons, well known RE entity attorney, but he says the following:
"To obtain the [charging order] protections offered by Wyoming or the other strong asset protection states you can create a LLC in one of these states and have it own your California [i.e. state where property located) LLCs. In this way the out of state LLC does not fall within the jurisdiction of California, nor is it subject to its enforcement actions."
So he argues that it is effective only if layered in this fashion, otherwise there's no benefit. I believe the Rich Dad attorney (writes their books on this subject) takes the same general position in advocating the use of WY or NV LLCs.
This is an advanced step for those with considerable net worth.