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Forming LLC in-state, delaware, nevada -> TAXes? - Posted by Jon
Posted by Jon on November 10, 2004 at 19:53:34:
Which of the following state is best for me to form an LLC for my start-up business which I intend to use for real-estate?
- in MD, the state where I often do realestate
- in Washington,DC the state where I work for my fulltime job
- in Virginia, the state where I currently live
- in Delaware
- in Nevada
I have read that Nevada LLC advantages are that there’s supposedly complete privacy and business friendly tax laws. Delaware advantages are also the business friendly tax laws.
Please give some advice on where I should incorporate for the greatest benefit in terms of privacy, taxes, and keeping more of the profits.
If I incorporate in another state would I have to file taxes for that state even though they don’t require us to pay corporate taxes?
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Posted by hawaiin flowers on October 05, 2005 at 09:08:57:
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Well - Posted by E.Eka
Posted by E.Eka on November 11, 2004 at 11:20:52:
Since you’d be forming an LLC, your profit and losses would flow to your state return that you file for your earned income (DC). DO you file in DC, MD or VA?
Also, there are some misconceptions with Nevada and Delaware. If you operate most of your business in another state, that state will require you to file and/or pay taxes…consult a CPA and Attorney who specializes in business org.
Adult Diapers… - Posted by David Krulac
Posted by David Krulac on November 11, 2004 at 11:19:26:
DEPENDS:
agree that you should talk to local in state attorney & CPA. In some states there are state taxes and fees that apply to out of state incs. They are called Foreign Corps. even though from one of the other 49 states or DC.
imho, not as either an attorney or CPA, in general I feel that its best to form the entity in the state where you operate. And even if you form in NV or DE but do business in MD, VA or DC you still have to file with those states and MAY be subject to taxes in those states. So you need to know the law not only in the state of entity origin but also the states in which you operate.
And another question that you didn’t ask is that in diffferent states the regulations and taxes/fees may be different for Corps, LLC, LLP, LP, etc.; which might have a bearing on your decision of entity choice.
Nevada LLC? - Posted by Randy (SD)
Posted by Randy (SD) on November 11, 2004 at 10:03:32:
Despite the sarcastic vote of confidence from Mr. Parker, you might be surprised at the wealth of information available for free on this and other REI sites Personally I recommend Nevada for reasons too numerous to list here, check out Laughlin Associates at Laughlin USA - Fast Reliable Business Incorporation & LLC formation - Home
Or My Corporation (dot) com http://www.mycorporation.com/
Folks here are incompetent, Find a CPA/Attorney - Posted by S.Parker
Posted by S.Parker on November 11, 2004 at 24:03:56:
CPA/Lawyers are the only ones who know about these stuff. I don’t know why you would wanna take your advice from people on this site who are mostly a bunch of neophytes. Even if there were experts, do you really think they’d take their time here to answer every question.
Whatever anyone on this site tells you, s/he’s probably wouldn’t know Delaware from Nevada or tax laws from privacy laws, so allow your BS detecter to start flashing because they most likely don’t know, wouldn’t know, and couldn’t know. Hire a CPA
Filing Tax returns - Posted by Jon
Posted by Jon on November 12, 2004 at 03:32:53:
Would it be different if I some other form of corporation was used other than LLC?
What is your reason for saying that there’s a misconception?
Last I remember, I filed all states, it is a big headache. I’ll be working in MD so I won’t have to file for DC.
Re: Adult Diapers… - Posted by rehabber
Posted by rehabber on November 11, 2004 at 20:13:43:
Dave -
I’ve read the issues with S-corps and LLCs - the
differences seem minimal (both use 'pass-through taxing,etc).
Question for you:
I understand Penna. has a ‘franchise-tax’. Does this
apply to S-corps, or LLC’s only? How much is it
per year (or is it a % of earnings). I also heard PA
may be getting rid of the franchise-tax? Is that so?
Also, I heard (this may be rumor) that with LLC’s -
one LLC can own other LLCs, whereas one S-corp may
not own other S-corps. My thinking was to structure
something like: Acme Holding, LLC (or S corp) which
owns subsidiaries Acme Properties, Acme Investors,
Acme Commercial Investors, etc.
I do mostly rehabs (buy, fix, sell) - what in your
opinion is better - LLC or S-corp? From what
I see, liability protection seems very similar for
both.
Thanks.
Re: Filing Tax returns - Posted by E.Eka
Posted by E.Eka on November 12, 2004 at 12:20:11:
Like some of the other posters mentioned people think that registering in Nevada means you don’t pay taxes. That’s only half right. If you do all your business in Nevada and you register in Nevada, then you don’t pay taxes. If you conduct all your business in MD and register in Nevada, you’ll have a Nexus and apportionment issue. (Apportionment will affect your sales, payroll and property (real estate, buildings machinery) Your LLC won’t pay taxes though. If it’s an LLC, everything will flow through to your personal return, so you’ll be paying personal tax rates on your rental real estate or real estate activity. SOme other states don’t have income taxes, but they may have gross receipts tax, which is based on gross revenue/income. I think Delaware has a tax on gross receipts. It’s been a while since I’ve done a Delaware corporate return.
lots of questions… - Posted by David Krulac
Posted by David Krulac on November 11, 2004 at 20:50:41:
-
besides either LLC or Corp, carry extraordinary amounts of insurance.
-
besides the franchise tax, there is also the capital stock tax, which is a real killer. its complicated but figures the worth of your company corp or LLC based on your yearly profit. Say you made $500,000 profit, they figure that your company is therefore worth $5,000,000 and taxes you on that value of your “stock” for the next 5 years. The only problem is what if that was nearly all the assets of the corp? Tough luck, you still owe taxes fro the next 5 years.
imho, not an attorney or CPA, there are much better ways to deal with this situation than either a corp or an LLC.
this capital stock tax was devised for manufacture and valued the company on the $ of merchandise sold. It just doesn’t work for selling real estate. I recently heard a real estate attorney speak and recommend that you have an individual LLC for each property that you own. To me that is overkill, and is not something that I would do in Pa., but that’s me.
IMHO, both the captial stock tax AND the franchise tax should be eliminated, but I’m not holding my breathe.
LLC home address, resident agent… should I? - Posted by Jake(MD)
Posted by Jake(MD) on November 17, 2004 at 15:24:13:
“Address of the LLC in MD” - Do you use your actual home address or some other address such as a P O Box?
“Resident Agent of the LLC”- What do most people put here and what would you suggest?
“Purpose of which LLC is filed” - do i just put “to do any type of business”?
Must I also register the name of my LLC using another form?
Re: lots of questions… - Posted by rehabber
Posted by rehabber on November 12, 2004 at 08:19:17:
Dave -
Thanks for the thorough answers. No wonder Penna. is
losing business (and population) to the tax-friendly
southern states. The govt’s ‘tax’ mentality in PA
is hard to overcome.