I am in the process of starting a nationwide real estate wholesaling business. I do not want to limit myself to deals in the local marketplace because my local marketplace is extremly competitive and expensive and I wish to go out of state to not limit my pool of deals.
My question is: I set up a wyoming LLC (because everyone says its good for protection). My funds are limited and I really dont want to open up 10-20 LLCs under my main wyoming llc in each state I do business in. Do I have to set up an LLC in each state I start wholesaling. Or can I just have 1 out of state LLC and use that. As It is cost prohibitive for me to set up all these LLCs since I am just starting out.
I physically live in Los Angeles, Ca.
Any tips are appreciated.
My understand is that as a CA resident you have a nexus in CA. So if you have an LLC in Wyoming you would need to register it in CA and pay the taxes to CA. Perhaps @Linda Weygant can shed some light for you.
For an llc to legal operate in another state, and execute any legal documents or file any kind of actions, that llc must be “registered” in the state you want to do business in.....typically as a “foreign entity”.
Vadim, that is a question for your attorney and account. Please seek legal counsel before you are hit with tax and business fees.
@Lee Ripma is correct - as a California resident actively engaging and managing an LLC from California, California will declare nexus and require a registration, a tax filing and a minimum $800 fee each year.
Marketing into other states may or may not create nexus (depending on each state's laws, so look them up) and need to register/file in that state, but as @Wayne Brooks indicated, you will most certainly need to be registered in any state where you want to sign contracts and otherwise conduct business in that state.
From each state's point of view, anybody who wishes to sue you must be able to do so in the state where the transaction took place so you must be registered in that state with an agent who can accept legal service on your entity, should the need arise. That's way before you get into the taxation issues.