Ohio LLC pays California LLC annual fees???

9 Replies

I live in California and I have some properties in Columbus, OH. I was thinking about creating an LLC in Ohio for future purchases since their annual fees are low. My new CPA is telling me that I'd also have to register that LLC in CA and pay the $800 yearly fee because I live here. That's the first I had heard of that. Anyone living in CA have LLCs in other states? My bank account for my rental properties isn't in California and I don't take any payouts from it but my address is on the bank account. I'll speak to an attorney about it but wanted to ask here first. Here is a link my CPA provided about the rule.

https://www.ftb.ca.gov/forms/m...

Originally posted by @Allen Tracy :

I live in California and I have some properties in Columbus, OH. I was thinking about creating an LLC in Ohio for future purchases since their annual fees are low. My new CPA is telling me that I'd also have to register that LLC in CA and pay the $800 yearly fee because I live here. That's the first I had heard of that. Anyone living in CA have LLCs in other states? My bank account for my rental properties isn't in California and I don't take any payouts from it but my address is on the bank account. I'll speak to an attorney about it but wanted to ask here first. Here is a link my CPA provided about the rule.

https://www.ftb.ca.gov/forms/m...

Yes, you do. Your CPA is correct. 

You're presence in California constitutes the conduct of business in California on behalf of your Ohio LLC. I have Ohio rentals as well California rentals. There is virtually no way to avoid this treatment by California although there are a few BP yahoos who might tell you otherwise.

We're in the same boat (live in CA, invest in OH with an LLC) and unfortunately, this is correct. If you haven't listened to the recent BP Rookie podcast featuring Brian Bradley, who is an asset protection attorney, I recommend you do so. I reached out to Brian after listening to that podcast and was surprised that he responded quickly. We're now working with him to set up our LLCs correctly and are working with a new accountant who understands how to work with that asset protection strategy and also maximize our tax strategies as well. Good luck!

Originally posted by @Bonnie Low :

We're in the same boat (live in CA, invest in OH with an LLC) and unfortunately, this is correct. If you haven't listened to the recent BP Rookie podcast featuring Brian Bradley, who is an asset protection attorney, I recommend you do so. I reached out to Brian after listening to that podcast and was surprised that he responded quickly. We're now working with him to set up our LLCs correctly and are working with a new accountant who understands how to work with that asset protection strategy and also maximize our tax strategies as well. Good luck!

I did watch that episode.  That's awesome that he responded so quickly.  Thanks for the feedback.

@Allen Tracy

California has a broad definition of doing business within California.

If decisions are being made within California, the entity is considered to be doing business within CA. Even if the sales, property and payroll are in another state.

Best of luck

Originally posted by @Basit Siddiqi :

@Allen Tracy

California has a broad definition of doing business within California.

If decisions are being made within California, the entity is considered to be doing business within CA. Even if the sales, property and payroll are in another state.

Best of luck

 I moved from one state to another state, neither of which is California, and California sent me a bill for $17,456. It showed up on my credit report as "California Franchise Commission" or something like that. I contacted them directly and they insisted I owed it & pay. They couldn't tell me why they thought I owed it. No record. Now, I know California is crazy, but I've never owner property or a business or lived in California. They made ME prove I never lived there and never owned property there. Now, how do you do that? How do you prove a negative? It was craziness from crazyland. I would vote "Yes" to let them secede from the Union.

"They made ME prove I never lived there and never owned property there. Now, how do you do that?"

You prove you didn't live in California by proving that you lived elsewhere.

You may want to show your notice to a CPA.
They will be better able to determine why you are getting assessed a tax / payment due.
The notice will normally tell you why you received the notice.

Best of luck