Encino, CA · Member since 2016 · 11 posts · 1 vote
I have a few questions regarding house flipping. I will be flipping a few houses this year in a couple different states. I have not started the LLC process yet but I was going to today. I thought it would be best to establish my LLC in Nevada because of privacy rights, SMLLC seem to be treated as multimember LLC. And from what I read the state offers more protection.
1. After my LLC is established, would I need to register the LLC as a foreign entity in each state that I will be flipping? I did read this but I'm not sure if this is more for people that are doing a different type of business per state.
2. Also do I need a business license at all? And if so what I need to get a business license in each state I will be flipping houses?
Keywords: LLC, business license, Flip, flipping, out of state
You will be required to pay taxes in any state in which you do business, and I imagine registering the LLC will be required in order to pay taxes in any state. Potentially, you may not be required to register in a state that doesn't have state taxes, but if you're working in one of those states, consult a local expert.
As for needing a business license, I'm not aware of any state that requires a business license for flipping, but I'm sure someone will chime in if they know of any.
You will be required to pay taxes in any state in which you do business, and I imagine registering the LLC will be required in order to pay taxes in any state. Potentially, you may not be required to register in a state that doesn't have state taxes, but if you're working in one of those states, consult a local expert.
As for needing a business license, I'm not aware of any state that requires a business license for flipping, but I'm sure someone will chime in if they know of any.
@Michelle Pinneo I'm not a lawyer and this is not advice. That being said, wherever you are planning to set up your LLC, if you're going to work from California, then you will need to register it in California, even if you do no flips there. So you'll need an LLC for CA + foreign registration wherever else you flip, vice versa works as well. If you're not planning to flip in NV, but say MO, then you're going to have a situation where you will have NV LLC + CA registered foreign LLC + MO registered foreign LLC, and you will need to pay for LLC fees and registered agents in each state. Not very economical, so I would personally skip the NV LLC if you're not planning on flipping there.
@Kuba F. that totally makes sense and yes it sounds like it would get kind of spendy :( it just kind of seems like a. Single member LLC in California doesn't really protect people as much is what they would think. From what I've read all over including bigger pockets it's very easy to pierce veil and, after a single-member personally. Don't get me wrong I don't plan on doing anything to scam someone intentionally or anything but California especially is super lawsuit happy! (you live in LA, you know that if you sneeze wrong you have a lawsuit attached to you lol) I know that there are other advantages to an LLC for flips like not being seen as a dealer through the IRS eyes. But if I'm spending money to do it I would like to be protected. I just thought Nevada offered better protection and privacy over most other states. Is there something else that I can do in order to protect myself?
@Michelle Pinneo I'm still not a lawyer and still not giving advice. The best protection of assets is to not have any assets to protect, and/or not engage in risky activity. If you have significant assets to protect, then you should probably pay for the services of an asset protection attorney. With flipping, you are going to have to accept some level of risk. Do everything by the book, and in the case when you are faced with a lawsuit, use a good liability policy as a first line of defense, and your LLC that you have properly structured and documented as the second.