LLC in DC, Maryland or Virginia?

Question

Hi BPers,

I'm starting a business in the DC metro area with my brother. Just from some quick research, it looks like the path that we want to go is a LLC partnership and not a corporation structure (S or C corp).

My question:

There are 3 states we'll be doing business in: DC, Maryland, Virginia. Does anyone know which state would have lower taxes for a partnership LLC? Currently I live in Maryland and my brother lives in DC.

Thanks for your feedback!

Aaron

Account Closed · Answer

@Aaron Smith You may also want to factor in BPOL (Business, Professional, and Occupational License) taxes in certain

municipalities in Virginia (like Fairfax County, Prince William, and others) on real estate and professional services revenue.

Vee Do · Answer

I am having the same question too. Would you mind sharing what you found out? Did you finally make your decision?  Which state did you find out is the best for open Real estate LLC? Thanks Aaron.

Aaron Smith · Answer

So far my research tells me:

-We would be classified as an LLC partnership. Its a pass through entity, not subject to corporate tax.

-DC imposes a 8.25% tax for all business income, including LLC partnerships

-Maryland has no tax on LLC partnerships, but imposes a tax of 7.5% to non-resident members (so income you receive would be taxed, but my income would not be taxed)

-Virginia has no taxes on LLC partnerships, but has a withholding tax of 5% for foreign LLCs doing business in Virginia.

Seems like Virginia is the best choice here. Am I missing anything?