Arizona LLC, Wyoming holding company, California resident

[Kevin Gillies]

I have 4 short-term rental properties in Arizona, I live in California. Looking to put them in LLC for asset protection and have Wyoming holding company. The question is do I do have 1 AZ LLC Or separate them. Then have the Wyoming company hold them. Do I need an EIN for the Wyoming LLC? Does it need to qualify to do business in CA? Does qualifying In CA lose my anonymity and protection? Or is there a better way?

[Ashish Acharya]

Originally posted by @Kevin Gillies:

I have 4 short-term rental properties in Arizona, I live in California. Looking to put them in LLC for asset protection and have Wyoming holding company. The question is do I do have 1 AZ LLC Or separate them. Then have the Wyoming company hold them. Do I need an EIN for the Wyoming LLC? Does it need to qualify to do business in CA? Does qualifying In CA lose my anonymity and protection? Or is there a better way?

I am going to answer the tax aspect of this question. 

Since AZ doesn't have the LLC-level fees/taxes, you can create multiple SMLLC for each property. In states that have entity-level LLC, the structuring needs to be changed to optimize the entity-level fees/taxes. You have to pay $45 per entity as annual report fees. (CA is different on this - see below) So the question should be: do you need different LLCs for legal reasons?

If WY LLC is also 100% owned by you, you dont need EIN unless you hire employees.

Since you are the sole managing member of the WY LLC, you will be considered doing business in CA for tax reasons. You will see some tax professional saying you need to pay 800 fees for all 5 LLCs five times. I have a different approach if you can structure your agreement in a certain way as do not like my client paying 800 for each LLC. If you want to take the more conservative approach, get one AZ LLC to save 800 for each LLC.

Depending on your future journey in real estate, it might also benefit from forming Sereis LLC at holding level.