Anderson business advisors /Wyoming trust &LLc
Lancaster, CA · Member since 2015 · 15 posts · 4 votes
Anderson business advisors /Wyoming trust &LLc
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CPA and Attorney · San Diego, attorney · Member since 2022 · 301 posts · 219 votes
3yI can't speak to Anderson directly, but here's some other food for thought. California is generally more cumbersome than other states 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 likely be deemed to be "doing business" in California and therefore likely 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 likely need to register it as a foreign LLC in California and have it be publicly searchable, which may mitigate any benefits from other states. Though, this process will be the same for the other state (if you created a CA LLC you may need to register it as a foreign LLC in the state in which you are doing business/holding property). This means that you will probably need to pay registration and filing fees in at least 2 states if you don't buy CA property as a CA resident; if you buy CA property as a CA resident, you may only need to register in CA.
Be sure to tell your accountant that you may now need to file non-resident income tax returns in each state where you own property as well. CA taxes residents on worldwide income but may provide a credit for taxes paid to other states.
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. Of course, with all things, the answers to all these matters will depend on the circumstances. Again, the benefits of a non-CA LLC could be mitigated or lost.
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. Also, the state of formation is likely where internal disputes would be brought among LLC members, so if you and a partner and/or spouse live in CA, you probably want to arbitrate in CA if the two of you had a disagreement. 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.
7 Replies
- CPA and Attorney · San Diego, attorney · Member since 2022 · 301 posts · 219 votes3y
I can't speak to Anderson directly, but here's some other food for thought. California is generally more cumbersome than other states 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 likely be deemed to be "doing business" in California and therefore likely 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 likely need to register it as a foreign LLC in California and have it be publicly searchable, which may mitigate any benefits from other states. Though, this process will be the same for the other state (if you created a CA LLC you may need to register it as a foreign LLC in the state in which you are doing business/holding property). This means that you will probably need to pay registration and filing fees in at least 2 states if you don't buy CA property as a CA resident; if you buy CA property as a CA resident, you may only need to register in CA.
Be sure to tell your accountant that you may now need to file non-resident income tax returns in each state where you own property as well. CA taxes residents on worldwide income but may provide a credit for taxes paid to other states.
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. Of course, with all things, the answers to all these matters will depend on the circumstances. Again, the benefits of a non-CA LLC could be mitigated or lost.
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. Also, the state of formation is likely where internal disputes would be brought among LLC members, so if you and a partner and/or spouse live in CA, you probably want to arbitrate in CA if the two of you had a disagreement. 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.
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes3y
@Emma Garcia
If you search them on BP there I believe is over 250 posts on them….
7e investments53 Reviews - Accountant · Hunt Valley, MD · Member since 2016 · 49 posts · 17 votes3y
I worked with a couple of clients that had used them and then I helped with their taxes. I can say that this wasn't the right setup for this client's case from a tax perspective. Can't speak as to legal and other services they may be providing.
- 3yLinda WeygantPro MemberInvestor and CPA · Arvada, CO · Member since 2015 · 2k+ posts · 3k+ votes
In my experience, they sell strategies and systems that are overcomplicated with a price tag to match. They do little to no training with the client for that price, so clients frequently don't understand the strategy they've been sold or how to effectively implement it. They end up bringing it to me so I can explain it to them and train them on it.
I've seen folks who end up having to tear big sections of the system apart because they've invalidated entities or otherwise don't need most of it.
They do have very nice presentation materials though.
- Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes3y
I have posted on this subject before. Having entity protection is a great thing. Clearly Elon Musk needs high quality legal entities. That being said getting educated on your entities is extremely important, A great entity is not much good if you run it incorrectly. You don't need an armored bus to drive around town in to be safe. Yet a heavily structured bus with dozens of safety features is clearly safer than your average car. Your business might be able to profitable if you spend an extra $200,000 per year driving a bus rather than well built car. Just putting your seatbelt on will provide massive amounts of protection. Bad driving will result in a dangerous crash either way. The cost of taking an hour longer to go to work and go to meetings, and the cost of more insurance, higher repair costs, hiring a driver with a Commercial driver's license, gas mileage of only a few miles per gallon, not being able to park anywhere is a huge burden on making a business profitable. A well build Cadillac or Mercedes, or even Toyota driven safely with your seatbelts on is only slightly less safe, but hundreds of thousands cheaper. Can you afford to drive a bus and still have the profit you want? Anderson Advisors sell a product for much, much more than other attorneys. The product is basically the same, but maybe slightly more elaborate. The cost would make most real estate purchases much more costly to buy and run and much more complicated. I am always leery of any company that claims to sell a special sauce that no one else has that is guaranteed to work. If there was a magic way to never have liability every lawyer would sell it. The truth is that having an LLC does create a lot of protection if you run it correctly, but if you drive a company car drunk and crash and kill someone you will be successfully sued as will your company. Every layer of safety comes with some cost in time and money. You should probably invest in some, but don't bankrupt the house doing it. If you are only buying multimillion dollar properties or large apartment buildings maybe you can justify it, but if you look at the really big players on this site who buy and sell millions of dollars of property, how many of them have 4 layers of companies and remain anonymous? None! Use entities when you get more than one or 2 properties, run them correctly, buy good insurance, and run your rentals correctly. That is the key to being profitable and safe.
- Member since 2021 · 54 posts · 36 votes3y
I am no pro however I looked at Anderson and they had a great model but it was $25K upfront and like $5K a year. The salesperson titled advisor was also really aggressive and not very helpful. I am sure if you had a decent amount of investment then the asset protection they offer would be worthwhile but Im just getting started. Anderson also has a clever strategy to maintain anonymity even in Ca. Involves the agent quitting and you being the stand-by or some such and don't have to be on the paper (trust) - I can't remember but no one else I spoke to had that plan.
I ended up going with https://wyomingllcattorney.com and I am happy with them. Not really apples to apples with Anderson but met my current small-scale needs.
Also want to support what the other poster said about Ca. I am pretty sure you will have to pay Ca $800 per year no matter what. I live here but don't really invest here.
- Contractor · Greater Houston and Greater Seattle · Member since 2023 · 22 posts · 9 votes3y
I use Anderson and am happy with them. Whenever I need a new LLC and operating agreement, I just send a quick email and I get all of that and our EIN. They've been helpful with my trust and entity set up strategy.
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