Living in California. Should I form my LLC in Wyoming??

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Living in California. Should I form my LLC in Wyoming??

Kay Lyn
Los Angeles, CA · Member since 2015 · 1 post · 0 votes

I'm a California Resident starting an online llc platform, that will be doing business throughout the US. I will be the sole owner and will be residing in california. Is it worth it to form the LLC in Wyoming over California?

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Jerry W.Pro Member
Moderator
Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
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@Kay Lyn, I am an attorney in Wyoming, I form corporations in Wyoming for people. I would advise you to form your corporation or LLC in California. CA will tax you a huge sum anyway even if you incorporate in a different state, and you will still have to register your corporation in the state you do business in. It will be less paperwork to just file in CA. Let me know if you have any questions. Best of luck to you.

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  • Marques Wood
    Lender · Roseville, CA · Member since 2015 · 10 posts · 0 votes
    11y

    http://www.bizfilings.com/wisconsin/incorporation.aspx

    0Reply
  • Jacqueline Carrington
    Investor · Corona, CA · Member since 2014 · 746 posts · 372 votes
    11y

    You'll still need to pay CA taxes and should check CA as to what paperwork you'll need within the state to operate properly with an out of state LLC.

    1Reply
  • Jerry W.Pro Member
    Moderator
    Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
    11y

    @Kay Lyn, I am an attorney in Wyoming, I form corporations in Wyoming for people. I would advise you to form your corporation or LLC in California. CA will tax you a huge sum anyway even if you incorporate in a different state, and you will still have to register your corporation in the state you do business in. It will be less paperwork to just file in CA. Let me know if you have any questions. Best of luck to you.

    8Reply
  • Ali Boone
    Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
    11y

    Nope. You'll still be stuck with all the CA LLC taxes. No way around it.

    1Reply
  • Jo-Ann LapinPro Member
    Loan Officer · Tustin, CA · Member since 2015 · 3k+ posts · 713 votes
    11y

    Less paperwork less headache CA

    [email protected]
    1Reply
  • Account Closed
    Investor · Bakersfield, CA · Member since 2015 · 161 posts · 46 votes
    10y

    @Ali Boone@Jacqueline Carrington@Jo-Ann Lapin@Jerry W.@Marques Wood@Kay Lyn I suppose which state to incorporate in depends on what you want to do. Yes, no matter what you do, CA will get their money, so if your sole goal is to reduce taxes, this is not the way to do it in my opinion. I've had a CA LLC before, but I'm planning on starting a new one in either Nevada or Wyoming due to liability protection laws and strong corporate veil laws. California LLC laws seem to allow the corporate veil to be pierced more often than NV or WY. I'd like to hear your thoughts on this if you have any info to share.

    6Reply
  • Jeff B.
    Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
    10y

    LLC Fundamentals.

    The State chosen to create an S-Corp or LLC is typically based upon the tax treatment of the entity - - Delaware & Nevada are the most common. Where the entity is created entitles you to operate ONLY IN THAT STATE!!

    If you live elsewhere and want legal entity status, then you need to FOREIGN FILE(FF) in the State(s) you wish to operate - - yep, one per.

    Sample: Created S-Corp and LLC in Nevada and had the S-Corp the manager of the LLC. Living and operating in Calif, I had to FF both of these in Calif. I was beginning to look at REI in Nashville and had I proceeded, would have to FF there too.

    Multiple filings produces multiple fees per state, so it gets expensive quickly.

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  • Jerry W.Pro Member
    Moderator
    Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
    10y

    Whatever state your LLC or Sub S Corp is doing business in, well their laws will apply. If you do business in Indiana and have a Nevada LLC it won't matter. If you are sued the Indiana court will apply Indiana law. If they file to pierce the veil and the court decides to do it and orders the LLC to divulge who the members are of an LLc or who the shareholders are of a corporation are you must comply. Keep that in mind. Now if you form an LLC in Indiana and you have an ownership through your Wyoming LLC you can still reap some benefits from the laws of Wyoming. It seems a bit much to layer up on LLCs until you get pretty big in investing.

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  • Jeff B.
    Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
    10y
    Originally posted by @Jerry W.:

    If they file to pierce the veil and the court decides to do it and orders the LLC to divulge who the members are of an LLc or who the shareholders are of a corporation are you must comply.

    hmm; If you query the right State office, ANYONE can find the members of the LLC or officers of the entity - - usually for free too.

    Operating under a legal entity is NOT about anonymity but legal protection of assets.

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  • Jerry W.Pro Member
    Moderator
    Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
    10y

    Actually the members of an LLC or the shareholders of a corporation do not have to be listed, and they can change without notifying the state. You must have a registered agent or corporate officer or general partner etc of record, but others can remain anonymous, at least in my state.

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  • Chris Ifeanyi
    Contractor · Burbank, CA · Member since 2015 · 3 posts · 1 vote
    10y

    Hi Jerry, I'm curious how this would work. I have an LLC in WY that has an ownership interest in a CA LLC. The CA LLC will be doing business in CA and paying taxes. However, the WY LLC only has an ownership business in the CA LLC. Does the WY have to register as a Foreign entity in CA? Thoughts on how this would work? Thanks

    1Reply
  • Jenifer Levini
    Attorney · Santa Cruz, CA · Member since 2015 · 345 posts · 358 votes
    10y

    Hi @Kay Lyn, i'm an attorney in CA and help with LLCs all the time. I'm curious about what youre doing that youre so worried about piercing the corporate veil. If the LLC is formed correctly, and the operating agreement is written correctly, and the LLC is managed correctly following the operating agreement, its nearly impossible to pierce. When it is pierced the members have mixed their own funds with the LLC funds, looted the LLC or stiffed a lot of contractors. If youre not planning to do any of those activities, I agree with everyone else here that it makes the most sense to file in CA and only pay taxes in one state.

    6Reply
  • Al Wilson
    Investor · Daphne, AL · Member since 2014 · 1k+ posts · 242 votes
    10y
    What does your lawyer say? Take his or her advice. Good luck
    0Reply
  • Jerry W.Pro Member
    Moderator
    Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
    10y

    @Chris Ifeanyi, this is not as simple of an answer but let me try. First off I do not know CA law so you to have a CA lawyer verify. If all you own is an interest in a company as a shareholder of a Sub S or an interest in an LLC normally a state cannot exercise direct jurisdiction over you. So having your WY LLC own an interest in a foreign LLC is fine, and provides a lot of protection. However if you take personal action in the state this can change. Lets say you buy used lumber in WY using your LLCs money and ship it to the foreign state and they build a building that collapses because the used wood you bought was rotten they can still go after you. Now if a different managing member buys the wood and you do not participate in that and the building falls down on someone you would not be liable. It is not just being a foreign owner it is also how you participated in the action that brought about the lawsuit. By and large just being a foreign owner does not make you liable for a lawsuit.

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  • Brad Brazeau
    San Ramon, CA · Member since 2016 · 2 posts · 0 votes
    10y

    @Jerry W., @Jenifer Levini, Thanks for your input and insights on this topic of WY and/or CA LLC's. I've got a follow up question that is on this topic, but not limited to real estate.

    I live in CA and will be doing business in CA as well as some states (selling some products retail online retail and selling wholesale to retailers in CA and other states to sell in their physical shops). The products I'm producing and selling assist the end use purchaser comply with newly mandated statutes in CA and some other states. While I'll have a good disclaimer that knowing, understanding and complying with local laws is the customers responsibility, I'm concerned that if a customer uses my products improperly and are found in violation of the local laws, they could attempt to sue me for the failure to comply with local laws. I don't anticipate that happening, but I'm trying to be forward thinking and consider any potential concerns that could negatively affect my family's security. 

    Based on this scenario, I'm less concerned with the extra expense of filing one vs two LLCs, and I'm more concerned with protecting the personal assets of myself and my family. I know since I'm a resident and will be doing the bulk of my business in CA, I'll need to file a CA LLC. My LLC/s will be sole member LLC/s.

    My question is: with this scenario, could there potentially be added protection from also filing an LLC in WY, since WY seems to have stronger protections in place for single member LLCs and my main concern is to protect my personal home and family assets from any future potential litigation? If a CA customer sued in CA, would the CA or WY courts and laws preside? If WY LLC would help offer more litigation protection, would it be preferable to file the WY LLC first and then the CA as a foreign filed LLC, or does that not matter? Any thoughts you guys have on this would be greatly appreciated. Thank you.

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  • Jerry W.Pro Member
    Moderator
    Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
    10y

    @Brad Brazeau, this is only general advice and you need to check with an attorney licensed in your state (disclaimer stuff), but here goes. Having 2 layers of legal entities does help protect you from liability. Even if one LLC is found to have violated the law or a contract does not mean the 2nd company is in violation. Example, the LLC who operates a rental is sued for a failing to repair a property and so when the roof caved in injured the tenant the manager breached his duty in not making sure the property is properly repaired. The property owner may also be sued, but may be able to prevail if all control was vested in the managing company. The owner could be incorporated in Wyoming and the management could be located in CA. Now in order to after the WY LLC you may have to use WY law. Keep in mind if you are the manager of the property you may have personal liability regardless of how many LLCs you have.

    As to protecting your core assets, like house, bank accounts etc if your wife is not an owner operator in your product business then keep the properties like your residence in Tenants by the Entireties ownership.  Even if they pierce all your corporate veils they cannot take property owned as tenants by the entireties unless both you and your spouse owe the debt.  Property in only your spouses name would also be exempt.  Now if your wife decides to sell it all and move away you may be in trouble.

    As to suing you from another state if they can show you did substantial business or had substantial contacts with the other state they can sue from the other state.  I believe the case name that set the precedent was International Shoe.  Hope this helps bud.

    1Reply
  • Brad Brazeau
    San Ramon, CA · Member since 2016 · 2 posts · 0 votes
    10y

    @Jerry W. Thank you. I appreciate your thoughts and info. Definitely gives me some things to think about. Thanks again!

    0Reply
  • Jenifer Levini
    Attorney · Santa Cruz, CA · Member since 2015 · 345 posts · 358 votes
    10y

    Hi @Brad Brazeau, Unfortunately, I cannot possibly answer that question without knowing a lot more about your products. For example, if it is a Cannabis product, the laws in California are being written right now. And you are not allowed to take these products over state lines. If it is a pharmaceutical it is subject to specific federal regulations and state regulations vary from state to state. Consumer protections vary from state to state too. 

    Overall, it sounds like you know that you need to hire a lawyer. Any general advice you get will not protect you. It's time to pay the piper, brother.

    Jen the lawyer

    1Reply
  • Ramsin Jacob
    Realtor · San Jose, CA · Member since 2018 · 184 posts · 71 votes
    8y

    @Jenifer Levini Since you are an attorney, I am curious to know the truth about something I learned online. I gathered that for Real Estate, I reside in CA, but if I were to create my LLC in Nevada first, then register the same name as an LLC in CA and the NV LLC would be the owner, then this would protect my assets from any creditor if there was a lawsuit of some sort presented against me. Is this true? Hope it made sense. Thanks.

    0Reply
  • Katie L.
    Attorney and CPA · San Diego, CA · Member since 2017 · 590 posts · 422 votes
    8y

    @Kay Lyn If you're doing business in California, you will be subject to tax in California. Not sure what types of business you're doing that you're so worried about the extra protections from Wyoming, but depending on what kind of problems you're anticipating, you might not even be subject to the laws of WY. If someone brings a tort action against your LLC (like a slip and fall), you might be subject to the laws of the state where the action happened. Seems unless you have a valid reason, you might find it easier to just create a CA LLC, as most people have pointed out. I don't have all the facts here or know about your other assets, your estate planning, your goals, the type of property, etc. so I won't give a blanket opinion.

    @Account Closed Not sure I entirely follow what you're asking. You want to create a CA LLC which is then owned by a NV LLC? Why are you so afraid of being sued? If you run your company properly then a single LLC should suffice? Extra layers probably makes it harder for creditors to reach your assets but if one can be pierced, the other probably can too. Courts may look through that scheme if you are just trying to screw people out of their right to sue you when you do something incorrectly. Plus, both would be subject to tax in California, so you would be paying an extra $800 each year just for having the NV LLC.

    *The information contained in this post is not to be relied upon.  It does not create an attorney-client or CPA-client relationship.  Readers are advised to seek professional advice from a competent professional who knows all the facts about their situation.

    1Reply
  • Ramsin Jacob
    Realtor · San Jose, CA · Member since 2018 · 184 posts · 71 votes
    8y

    @Katie L. Thanks for the reply. You got it backwards though. First, create the LLC in NV. Then that NV LLC, becomes the owner of the CA LLC. It's not about fear of being sued. It's about protecting what is mind from anyone who may choose to screw me over. It's also not having to do with operating business incorrectly on my end. People in this world will develop a mindset to go after you when you are successful from a jealousy and envious standpoint. People frame others all the time. I run multiple businesses in the clothing industry and I am involved in the music industry, my endeavors and business only continue to elevate. Jealously and envy is a characteristic many have. It's for my protection, away from these type of people if I ever happen to run into them, not saying that's happening now, but I have already experienced it.


    Watch this video, towards the middle of the segment, he explains what I am mentioned and he also says it is something a lot of people already do: https://www.youtube.com/watch?v=XdSp5GXbiE4&t=1775...

    If this setup is actually true and legal, I don't see why not everyone set up this way. Ok $800 extra a year for a NV LLC, not a big deal.

    1Reply
  • Laura Bruneau
    Member since 2021 · 1 post · 0 votes
    5y

    Hello everyone, I am French and lived 8 years in California on a Visa. I am now back home but i would like to create a LLC to sell leather goods in the US, in California we can't do it if we are not a resident. Looks like it's possible in Wyoming to own a LLc without being a US resident.

    Problem is that my products will be sold online anywhere in the US and i would also like to be able to sell it in stores in California.

    Does anyone has good tips on how to manage this?

    thanks :)

    Jeanne

    0Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    5y

    I believe it's possible. READ THIS: https://www.nolo.com/legal-enc....

    Registering an LLC in Wyoming is easy and can be done on your own through the Wyoming Secretary of State website. You will need a registered agent but there are companies online that provide that service for a nominal fee.

    The DIY Landlord Book4.7247 Reviews
    WebsiteView Page
    1Reply
  • Elizabeth Park
    Member since 2022 · 70 posts · 21 votes
    3y

    Hello. Here is what I have collected so far and please correct me if I am wrong. 

    One way to layer the business protection is to create a Wyoming LLC. Then Create California LLC (I reside in California and the properties are in CA) for each of the property you acquire. Then Assign the Wyoming LLC as the manager of the CA LLCs.

    That way we get the anonymity with the "head LLC" from Wyoming. This DOESN'T mean your name is anonymous if you get in a lawsuit. It's mainly to stay anonymous in instances like your tenants can't find your trace to the LLCs.

    There is a lot of other components to the above set up. Is this something that works? What are the downside? TYIA!

    1Reply
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