Which state to file LLC.

Question

Hello and thank you. I am moving from Michigan to Chicago and will be renting out my house in Michigan. I was wondering which state I should file the LLC in. Along with that does it matter where I set up the business bank account for rental income? Anything else I should be thinking of or considering? Appreciate the feedback.

George Skidis · Answer

My office does tax returns. There are two types of business entities for state tax purposes. Domestic and Foreign. Foreign LLCs and corporations file two state tax returns. The first return is where the business entity does business. The second is where it is domiciled. So if you set up an LLC in Illinois that does business in another state that means two state returns in addition to the federal.

Foreign entities also need to hire and pay for a resident agent in the state you no longer live in. In fact you will need this anyway since you can no longer be the registered agent since you no longer live there.

Have you considered hiring a property manager and letting their business entity face the music. You will also need good liability insurance and a million dollar minimum Commercial Umbrella policy.

Members of Illinois REIA have access to ARCANA insurance.

Natalie Kolodij · Answer

@Aaron K. is correct.

Typically you want the LLC in the state where your business/ rental is.

Otherwise you need to register it there any way as a foreign LLC doing business there.

Bank location does not matter. Just ensure the LLC has it's own account.

Crystal Smith · Answer

We have multiple LLCs.  Some are in Vegas, some in Illinois. Why Vegas?  We liked their privacy laws.  With that said if you're doing business in Michigan & file the LLC in another state Michigan may consider the LLC a foreign entity (Foreign to Michigan), which means you'll have to file the LLC in Michigan as foreign before conducting business.  This means extra fees.  Hence why we have some of our LLCs in Illinois for the business we conduct here.

Aaron K. · Answer

Always have the LLC in the state where you will be doing business which in this case is Michigan

Ryan Bianchi · Answer

Thank you! How about the Registered Agent for the LLC. Since I am no longer in Michigan, does it need to be a Michigan resident (my Father perhaps)? Or can I be the RA myself?

Which state to file LLC.

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