All Forum Posts by: Matt Horwitz

@Account Closed, I'd avoid giving your brand LLC any ownership in the LLCs which own property. Keep the entities separate for extra protection. The way you go about it is just forming separate LLCs. You don't have to open a bank account or get an EIN for the brand/inactive LLC. You don't have to pay taxes either, federal or state. PA used to require single-member LLCs (I'm assuming that would be your setup) to file an RCT-101 w/ the PA Dept. of Revenue, but that's no longer the case. And federally, the single-member LLC is taxed as a Sole Proprietorship. If the LLC doesn't have any income or expenses, then you don't have to file a Schedule C. Feel free to run it by an accountant to double-check. Let me know if you'd like more detailed steps for how to file an LLC in PA. Hope that helps.

@Dave Blackman, you're welcome. Indiana, along with ~32 other states follow Sec. 15.01(b)(9) of the Revised Model Act, but I believe that is intended to mean for buying and selling personal property. You're talking about about something different with flipping. Now, a lot of what qualifies as "doing business" is very gray in most states. It's like that intentionally. I'd call the SOS again and maybe run this be a few attorneys. If you call 3-5 Indiana attorneys and ask the same question, you'll get a good feel for what the best course of action is. Keep me posted if you don't mind. Would love to hear what you come up with. This questions are always tough to answer.

@Kyle Burrows, since Texas is a community property state (and you are both the only owners), you and your wife can elect to be taxed as a Sole Proprietorship, also known as a Qualified Joint Venture election made with the IRS. 

Now, you can choose to be an unincorporated Partnership (taxed as a QJV/Sole Proprietorship), or you could form an LLC (for liability protection), then have your LLC taxed as a QJV/Sole Proprietorship.

Either way, I'd say the following would be the primary benefits:

• Save money: You'll save money on accounting and tax preparation. Instead of the need to file a Partnership 1065 return, K-1s, and then a separate 1040 for each spouse, your accountant will just file a Schedule C along with Form 1040 for just one spouse.

• Social security and Medicare: You can get additional credit for paying Social Security and Medicare taxes (without actually having to pay more in taxes).

@Dave Blackman, there are two things going on here. What's legal and what'll happen. A lot of title companies won't require a foreign LLC registration to close, but some may. I'd phone a few title companies and ask about what LLC documentation they need at settlement.

Now there are people doing business in Indiana with non-registered out-of-state LLCs. Does that mean it's legal. No. But it's common. However, both the Secretary of State and the Department of Revenue have the power to impose penalties and fines. Additionally, since your LLC is not registered to do business in the state, you won't be able to take someone to court in IN.

So do you have to? No. Should you? Yes. You're doing business in Indiana.

@Kevin Smith, you're welcome, and you're correct. Great question regarding licensing. I actually have no idea about that, but I'd call the state real estate commissions in all states where property is. Or maybe someone else can chime in. Apologies I couldn't be more helpful.

Hi @Kasia I., InCorp is okay, but I prefer the other two companies. If you get other mail besides service of process (which is quite common), InCorp charges extra to forward to you. Northwest Registered Agent on the other hand, will scan it into your online portal for you to download, no questions asked... and they don't charge extra. Hope that helps

@Kasia I., do you have a street address in Alabama, or have a friend or family member that lives there? If so, you/they can serve as your LLC's Registered Agent. If not, I recommend IncFile ($99/year) or Northwest Registered Agent ($125/year). IncFile is cheaper, but Northwest has better customer service (and is far easier to reach by phone).

@Kevin Smith, the "proper" way to do this would be to form a domestic LLC in Texas since you are doing business from there, then file a foreign LLC registration in both Arizona and Florida. Then create agreements between the Texas Mgmt. Co. LLC and both the AZ LLC and yourself. A bit tedious, but that's the kosher route.

- TX domestic LLC reg. is $300 and then Annual Report will likely be $0 (unless gross receipts > $1M). File Public Information Report (PIR) and Franchise Tax.

- FL foreign LLC reg. is $125 and the Annual Report is $138.75.

- AZ foreign LLC reg. is $150 and there is no Annual Report.

You're welcome @Barry Cooley!

@John McAuley, I believe you're right in that you'd only be saving on the Medicare portion of the SET. Those savings may not be worth the actual cost (and time/opportunity cost) of transferring the property(ies) to the new entity. I also believe there are other mid and long-term things to consider, so would love to hear what you find out after some conversations with CPAs.