I live in CA—but my properties are in TN and NY. Should MY llc’s be set up in the state the property is----also in setting up bank accounts —should i go to my local bank—or a local bank where properties are located. Any thoughts?
banking locally is more convenient, but being in CA that will open you up to CA taxes. If you can bank out of state (or find a bank that will open an “out of state” account that you can access in CA) you’re probably better off forming elsewhere.
When financing directly to a LLC, sometimes the lender wants you registered in their (or the property’s) state.
I cannot answer the question in regards to which state you set up the LLC, I have similar questions myself.
I am thinking out loud here: As for banking, how about setting up an account with a major bank that has nationwide access? It seems that you could call a national bank in TN or NY and set up the account remotely, then visit your local branch and avoid some tax issues.
This is kind of my thought with the LLC. From what I have read, it seems you would more than likely have to register your LLC with each state your property is in regardless. So setting up in CA would simply increase your tax liability. Am I wrong?
Every state that the LLC is registered in will expect their cut of the tax pie. With that in mind, if you were going to invest in multiple states, it might be more advantageous to have multiple companies: the tax savings outweighing the costs.
I’ve read somewhere in here that some large banks will establish “out of state” accounts, but you must be specific when setting it up. I don’t know if having a CA address on your NV checking account creates nexus.
I’ve never actually dealt with this issue, so we’re sort of charting a plan here…
Hm. So setting up an LLC outside of CA while investing in CA would only mean you would pay tax on the transactions done within CA?
I was looking into opening an LLC in CA also, but it’s a $900/yr tax to mantain the entity due up front - kind of threw a wrench in that plan…
CA will tax you on EVERYTHING and I do mean EVERYTHING.
If you live in CA & have a NV LLC buying property in Alaska with a bank in MN… CA will tax it. and probably AK and MN, too.
That’s why even having a CA address on a bank statement would make me nervous.
With all those taxes flying around, it soon becomes cheaper and simpler to have multiple companies for out-of-state investments.
Thanks for that…
When you mention having out-of-state addresses do these need to be physical addresses or do P.O. Boxes work?
Setting up an LLC outside of CA would keep me from paying their $800yr CA LLC tax though, correct? - I got this info fro Here it says: “For example, California has only a $70 filing fee, but an $800 annual tax.”
And one last question… I’ve heard it mentioned Wyoming has taken the reigns as best state to form a corporation now. Any insights on that?
Thanks so much for your time
you’ll have to have an actual physical address within the state. There are companies that provide registered agent service for a fee; you’d have to evaluate this fee vs the $800 annual minimum tax in CA.
I know nothing about Wyoming, but I’d like to go there.