AZ Foreign LLC For Property In TX
I live in AZ and I have a parent LLC in AZ. Since establishing TX LLC is costly, I am thinking to use AZ Foreign LLC for my property in TX. What do you think? Any input will be appreciated. Thx.
If you're going to keep your TX property for rental, then you'd be advised to register your AZ corp in TX, and this will require some annual fee to TX Sec of State.
If you're just going to flip, that probably would NOT require TX registration, as you're probably NOT d/b (doing business) in TX as that legal term is defined under TX law.
Why do I need to register my AZ corp in TX? I was thinking to setup a subsidiary LLC. The parent LLC is only one (in AZ) . What I was debating is whether I should create the subsidiary as TX LLC or AZ Foreign LLC.
General law is that an out-of-state corp needs to register in any other state in which it is "Doing Businss", a legal area with hundreds/thousands of decisions, as to what is/is not DB.
If that state's laws would require registration there, and you didn't, if sued, your could then be penalized by not being able to present defenses, etc...NOT a pleasant position or posture.
And generally speaking, if your A state corp is NOT going to be DB in B state, by renting your B state RE, then no B state regis. would be required.
I'm not going to give you any more specific advice because this is just a forum for general advice, and you'll need to eventually hire a TX lawyer to advise what your specific responsibilites are under TX law.
JM,
Thank you very much for the input.
EW
There is an alternative view that says you cannot really hide so focusing too much on the structure for asset protection is unproductive. The question becomes what is too much.
If the structure is too complicated you tend to find that you lack flexibility for financing or just a paperwork blizzard.
You can use liability insurance to insure the risk (some of the risk). That is not the same as privacy.
You do not want to try to avoid tax. You want to legally defer when ever it makes sense.
You also have to figure you will die and maybe that means the brains of the operation will die at the same time. Hence some form of estate planning is a factor. Call it the end game. If you leave a complex structure try to leave notes as to what the next person should do to unwind it if they want to liquidate and move to a better location at the beach, etc.
John
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