LLC's In CA, NV, DE
I too am looking to form a LLC in either CA (where I live), NV since no state taxes makes it cheaper or DE since that's where most millionare companies have there LLC's.
In CA, taxes I think are $800 a year minimum. If I go to NV to get around this, I have to pay extra to have someone else there stand in my presence correct? Also, I'll need to pay for an out of state address or PO box correct?
In state seems like like hassel, but a No tax state like NV sure seems to save more money.
What does anyone know about where I should register my LLC and how quickly can I transfer my new duplex purchase over to my LLC?
I close this week on my first and (out of state) deal.
Colin
Colin, Thanks for your question regarding which state to place your LLC.
I want to invest my IRA's into REl by utilizing a LLC. Is this what you are doing also?
I have been talking with Guidant Financial Group (facilator) but feel their set up fee is "steep"
I would be open to other suggestions.
Sharon :-?
I have not thought about rolling my IRA's into my LLC, but I wish to protect my properties from and my credit scores in an event of a defualt and/or foreclosure on one of my rentals.
It takes about 30 days to get your LLC set up and registered. sometimes longer depending on the mail and if you need to find who to use as your out of state contact and address. I still have not decided which state, I am leaning torward my home state for convenience or NV since it's a no tax state and is still next door.
If there is anyone else who had deeded or othwerwise transfered a property off your name and into your LLC, I would like to hear how you went about doing it and any additional costs there is after setting up your LLC.
Colin,
I have the same questions and even go so far as to question the neccesity of an LLC in California. The $800 annual tax plus the setup fees seem quite steep towards the possibility of added protection against personal lawsuits. Below is another post I found with one persons opinion of whether to form in NV or CA:
"As a general rule, if you are a resident of CA and are going to be conducting your business there, then it is likely that you will not materially benefit from forming your LLC in Nevada. You still must register it in CA as a foreign LLC, meaning that you now pay two sets of filing fees. You open yourself up to be sued in Nevada as well as CA, which can increase your litigation costs (because you'd need to hire a NV attorney and then travel to NV for any required court appearances, etc.). In addition, of course, you still have to pay taxes to CA either way. As far as liability protection and "piercing the corporate veil" goes, because you are going to do business in CA, it will be CA law that will determine what principles apply for that, whether you are organized in NV or CA. The general rule to remember is that matters concerning the relationship among shareholders/members and between shareholders and the company are determined by the law of where the company is organized. But many other matters are determined by the state law that governs the transaction at issue: e.g. if the business is in CA and the transaction at issue is in CA, CA law will determine when you can look past the corporate shield to the shareholders/members. Of course, the better thing to do is run the business properly to begin with so you don't give someone a colorable claim for piercing the corporate veil. If you want the limited liability protection, protect it by doing things right.
If privacy is very important to you, then organizing in NV or DE can be useful, as they demand less information for setting up business entities and don't provide a lot of information about business entities to the public. But bear in mind that anyone who has a claim against the company will be able to get the information in discovery during the lawsuit. "
Hope this helps as I still have the question of how an LLC helps privacy if the "discovery process" will dislodge this cloak of secrecy anyway??
Thanks for the info on NV LLC's. I actually am buying two properties in Denver, CO and thats where I will need my LLC protection in case a tenant defaults on making my loan payments.
Would I still have to pay CA state LLC taxes if no transactions or business occured there? That's why I wanted NV. Or CO even.
Anyone know CO for forming a LLC? I will propbably choose CA if NV does not make sense. (Unless CO may give me better protection for properties in CO.)
I only want to get my name off these properties ASAP after I buy them. I understand I have to "sell" them to my LLC correct? If so, you know of any lenders lending loans to LLC's?
Colin
[addsig]
All, be careful about the advice you quoted above, it's only partially right. Nevada has the best LLC law in the US, period. Delaware and Wyoming are also top notch but slightly less favorable.
Courts, by very well established principles, generally look to the state of incorporation (generic term for forming an entity). Thus, a CA court would look to Nevada LLC law for actions against a Nevada LLC doing business in CA. The advantages of this cannot be overstated as it often means the difference between setling a claim for a fraction of the judgement and total loss.
Also, the CA taxes you refered to are simply for having an LLC, you will still owe whatever income and SE taxes are due for that entity. Nevada charges about $85 a year for registration and you'll pay a bit for a registered agent, etc.
You should strongly consider a multilevel LLC structure, with one top level LLC owning other Nevada (or other state LLCs). To the extent possible stick with Nevada, costs are lower and the law is better.
Avoid single member (owner) LLCs as most state laws tend to disregard many of the stronger LLC protections for single member LLCs (Colorado in particular).
Try searching for Nevada and LLC and you should come up with a number of hits for companies that sell LLCs. Don't even think about buying services right away but review a number of these sites and you will quickly discover the advantages of Nevada law over most other states.
Also, consider having your top level LLC taxed as a corporation, it can be beneficial for those who live in high tax states if you plan well.
I live in NV and use a NV LLC for most of my busines. Here are the benefits.
Excellent case law - only 1 case has had the corporate veil pierce in NV, and there was blatent fraud.
No state personal/corporate taxes. This is great if you live and operate here. If you live in CA, you will pay personal income tax there (for whatever you pass through to your own taxes) and if you operate in CO, you will pay taxes there as well. Each state gets their share, but not so you'll be double taxed. FEDERAL DOESN'T CHANGE.
Privacy - there are ways in NC that your name will NEVER appear on documents related to the LLC, even if you are taken to court. You use a statutory agent as a third party "buffer". They are on the LLC name, and you have a separate agreement with them that is not on any LLC documents. Most states do not allow this.
There will be extra costs if you live out of state/work out of state, as you will need agents/lawyers to set up and manage the LLC for you if you live out of state, and you will need to file as a foreign corporation in CO if you want to operate there. If the liability and privacy are worth it for you, go for it. If not, then don't.
DO NOT FALL FOR A SCAM. many companies will tell you that they can hide your taxes by creating a co in NV and putting most of your expenses on the high tax co. IF YOU OWN BOTH COs (all the owners), you will have to pay the taxes anyway. IRS laws are clear on this.
joemac and mantis
can you recommend a company in NV that sets up LLCs?
Findd Las Vegas and Reno yellow pp., online, and make some calls to compare costs and services.
A friend of mine thought he'd really found a deal when he hired a NV co. to inc. his LLC, but it ended up costing him about $3500...much more than any NV corp. lawyer would have charged him.
I formed my co. at www.legalzoom.com for about $300 with everything.
DaShow,
What did you need to know before you went that route?
Any advice on how/what to know per forming a LLC?
Also, I've read posts that sound like some have multiple LLC's, any thoughts? Thanks.
An IRA is not & cannot be "rolled" over into an LLC.
But frequently it is easier to have your SDIRA BUY all or some of the units of an LLC and then have the LLC buy whatever RE asset it so chooses...but that is NOT a "rollover" as such is defined by IRC or IRS rules.
A SDIRA can own virtually any invetment asset, including stock, LLC units, RE, etc.
A rollover is from one IRA to another IRA custodian/trustee, or from 401k to IRA, etc....all tax deferred, as rules say that no taxable distribution has thus occurred.
Also, fyi, every corp or LLC that happens to merely own RE in some state other than where it was formed, is NOT DOING BUSINESS per se, in State B.
DB, under corp law is a very extensive, heavily litigated legal topic, with hundreds or thousands of court decisions, and pretty universally it has been ruled that the mere ownership of RE in a state does not thereby mandate registration in that state.
If the LLC is operating a rental in State B, then yes, it probably is required to so register in State B, but otherwise likely not required.
Mantis--
that is some excellent information you shared. Thank you. How do you keep track of all that - top level LLCs having ownership in lower level LLCs, transfering assest back and forth, paying owners, etc.. I understand you need a good attorney to set up the LLCs. After formation does an accountant keep track of all assests and money and payroll or do you do that? I can see why you need to keep great records - sounds like it can get very complex.
Mantis, you did a great job I think on explaining exactly why I started this thread.
Thank you.
One more thing, I will be setting up my LLC in NV with a lower LLC in CA as I live in Los ANgeles. Does it matter which state LLC I set up first? i already have a business in CA, but it's not yet an LLC. NV should be first correct?
Since my properties are in NV and CO., I will still have to warrenty deed the CO properties into NV LLC to protect them from CO law correct?
Also, if the LLC is new, it may be hard or impossible to get qualified on a mortgage loan without any history correct? How do you go about this?
I may turn to Nevada Corp. Inc. for their services. Anyone heard of them and know of their service levels?
[addsig]
I formed a corp in NV in 2001 using Nevada's Best Incorporators. I paid 235.00 and they are still my resident agent. Very pleased with them.