Hey guys I'm trying to start an LLC to put my first rental property in. I live in Los Angeles California, but my property is in Indianapolis Indiana. Do you need an agent in process with a physical address there in Indianapolis Indiana to set up/register LLC with SOS like you do here in California?
You will need a resident agent for your LLC. That is true whether is is a foreign (i.e. other state) LLC that you register in Indiana or an Indiana LLC. If you have a local attorney create your LLC, they often are willing to be your resident agent forever for free. Otherwise, a resident agent typically costs about $100/year.
On a side note, are you sure you need an LLC? Don't just buy the fear-full sales pitch; study the situation before jumping.
I don't believe you need a physical Indiana address to register your Indiana LLC with the SOS. The process is very easy on https://inbiz.in.gov , it takes maybe 10 minutes. I could be wrong since I am in Indiana but I don't recall it being an issue when I've used the inbiz system.
California is a sort of beastly state when it comes to taxes and filings. Even if you create a non-CA LLC, if you are managing the business from California, you will be deemed to be "doing business" in California and therefore subject to CA taxes. California charges a minimum tax of $800 a year per LLC, and more if you have gross receipts in excess of $250k. So, if you create an LLC in another state, you will need to register it as a foreign LLC in California. Though, this process will be the same for the other state (if you created a CA LLC you will need to register it as a foreign LLC in the state in which you are doing business/holding property). This means that you will need to pay registration and filing fees in at least 2 states if you don't buy CA property.
This article goes into a lot of the considerations about whether to form an LLC or not: https://www.mmpph.com/wp-content/uploads/2019/04/May-2019-newsletter.pdf
Be sure to tell your accountant that you now need to file non-resident income tax returns in each state where you own property as well. Most likely the state where the property is located is where lawsuits would be brought if they are something for personal injury like a trip and fall or something of that nature because the “cause of action” arose in that state. So even if you pick a state with stronger protections like WY or NV, the cause of action arose in the state where the tenant fell, so likely that the court where the accident happened would have jurisdiction.
California tends to have more laws on the books and requirements and restrictions that it can be a good idea to form a CA LLC for out of state property so that you as a CA resident are covered, and to try to have your contracts fall under the purview of CA courts.It also is helpful to have a California LLC in case you ever sell that property and move into another state so that you do not need to form a new LLC altogether with new operating agreement, just re-register in the new state as a new foreign LLC.But, that is not always the right answer and you should speak with someone familiar with your personal situation to get advice specific to you.
*This post is informational only and is not to be relied upon. Readers are advised to seek professional advice. This post does not create an attorney-client or CPA-client relationship.
@Jason Ma Hi Jason, why do you want to do an Indianapolis LLC? Normally I'd say that's a good one since it's cheap to create and maintain(location generally isn't a big deal) but if you live in CA, it's a bit different. We actually recommend a Delaware Statutory Trust for our clients who live in CA because it provides equal protection but avoids the hefty requirements Katie mentioned here.
Feel free to connect if you'd like to know more.
I am in the same boat. I am in Utah investing in Indiana. So am I reading that I need to make an LLC in Indiana, or in Utah?
Great article you linked @Katie Lepore ! Very informative. Something I'm recognizing is how personal the decision is to form an LLC, increase insurance protection or some combination of the two.
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