Perhaps you good folk can help me please.
Most conversations and all the information I have read appear to recommend one of these 4 states as the state in which to set up your management LLC. But of course, depending on whom you read/speak to, everyone has a different opinion.
Some say you can have the LLC with any rental income coming into a private bank account (though how that works I don't get. How can a company own a property with the rental income going to a private account?). Others obviously recommend the money goes into the company account.
If I say, I'm happy to discount Delaware as an option, can anyone on here provide me with the 30sec run-down on why which state is better. I know the remaing 3 all have no state income tax, but what about other more important factors? For instance;
1. Annual ongoing fees
2. Filing requirements
3. Look through facilities
4. Landlord friendly laws (i.e. you're not going to have some douchebag holding your property to ransom)
5. Statutes of Limitations (Future and Pre-Existing)
6. Anything else I'm still ignorant of.All opinions welcome please?
cheers
EP
It makes good business sense to have an account dedicated to the LLC, but it is not compulsory to have a bank account for an LLC. Other investors are having their rental income wired to Australia, which proves to be very expensive at the end of the day. In the event that you do not have an LLC bank account a private account dedicated to the LLC is a good option. It allows you properly track transactions.
Delaware
It is America's most popular destination for incorporation. Its laws are pro-business and pro-privacy. The Secretary of State in Delaware does not maintain shareholder information and big corporations love this, because they want to protect their shareholders. lol…..now It makes it difficult for creditors to determine who a Delaware entity owner is. (I have talked to people who in the future want to use the equity in the LLC to borrow in the U.S. and to buy a second property + they are a foreigner in the U.S.A. = I do not know if it makes the bank happy. It also makes it difficult for tax authorities, police or third parties to determine who is a Delaware entity owner.
So if you incorporate in Delaware and buy a rental property in another state, you also have to incorporate in the state you are doing business in (state with the rental property). So the Delaware registered LLC will be a foreign entity in the state where the property is located. To foreign qualify, the correct paperwork has to be filed, called a certificate of authority and additional filing fees must be paid in that state.
Points to Consider
- State filing fees for each LLC under consideration
- State filing fees to foreign qualify in the home state
- Ongoing fees imposed on corporations and LLCs by the state under consideration
- Ongoing fees imposed on foreign corporations and LLCs
James Simango, CPA
http://www.ustaxcentral.comThanks the response Tapfuma,
Perhaps I am misreading your response, but it was my intention to delclare that I am happy to completely avoid Delaware. And so was looking more for information on the other 3.
I really think you would be better speaking with US corporate Attorney firm about it. Essentially no difference between Wyoming and Nevada, except for filing fees and charging orders against a corporation (to do with when you are sued, how people can access compensation if the case is found against you).
The following notes (in blue) are from an information package from Corporate Direct, a law firm in the states, and from my email conversation with my contact there.
When forming LLCs in Nevada and Wyoming the protections offered by state law are very similar. Garrett feels the these two states offer the strongest charging order protection for LLCs. When forming a corporation the main difference is when there is more than one shareholder. In this instance Nevada would be better as Nevada is the only state that includes charging order protection for corporation, but there has to be more than one shareholder.
Why would a person form an entity in one state and then qualify in another state?
Many people will form an entity in Nevada for the privacy and asset protection benefits and then qualify to do business in their home state, California, for example. The qualification process involves having our Nevada office, for example, provide a certificate of good standing for the Nevada corporation and then file with the California Secretary of State for permission for the Nevada corporation to do business in California. It is not an overly complicated process, but it is an important process to ensure that your entity's limited liability protection follows you into the states in which you actively conduct business. Corporate Direct provides this qualification service at an affordable price.
Why incorporate in Nevada?
For many reasons, Nevada is one of the best places in the United States to incorporate. Nevada has excellent privacy laws, minimal reporting requirements, close proximity to the major California market, good road and air transportation connections and a business-related infrastructure that continues to attract major businesses such as Starbucks, Barnes & Noble and amazon.com.
Privacy: Nevada does not share shareholder information with the IRS. In Nevada shareholders are not a matter of public record which allows for maximum anonymity and privacy. In addition, nominee officers and directors can be provided to further enhance privacy.
Asset Protection: Nevada's asset protection laws are viable and the corporate veil remains one of the strongest in the country.
Corporate Flexibility: Directors, officers and shareholders do not have to live in or hold meetings in Nevada. Telephone meetings are permitted. One person may hold all director and officer positions, and directors/officers do not have to be stockholders. Corporate bylaws can be made or expediently changed by Directors. Nevada law also allows for various classes of stock and debt, securities and voting restrictions, rights and preferences to be included in the articles and bylaws. These and other favorable features of Nevada corporate law provide for great corporate flexibility and ease of maintenance.
Favorable Capitalization: No minimum capital number is required to incorporate. Shares may be issued not only for money or assets invested, but also for personal services, leases and options granted, and personal property. In addition, a Nevada company may purchase, sell, hold or transfer shares of its own stock.
Why incorporate in Wyoming?
Wyoming is one of the fastest-growing states for low-cost, low-maintenance and no state tax incorporations. Why? Because Wyoming has actively sought to make it’s corporate law and business tax structure friendly and attractive to out of state companies looking for the best all-around tax and legal structure.
Privacy:Wyoming requires officer and director information only. No information on shareholders is collected or shared with the IRS. Nominee officers and directors can be used to enhance privacy.
Asset Protection:Wyoming has strong asset protection law – perhaps the strongest in the United States today.
Formation Costs:Wyoming is inexpensive compared to other states, even Nevada. Minimum filing fees add up to maximum savings for you.
Maintenance Costs:Wyoming has one of the lowest annual fee structures in the United States. Because the Wyoming annual fees are based on assets or employees physically located in Wyoming, you could pay as little as $50 per year to maintain your non-resident Wyoming entity.
Low Capitalization: Wyoming has no minimum capitalization requirements. Some states, such as Texas insist that you put at least $1,000 into your entity on formation!
Corporate Flexibility: Directors, officers and shareholders do not have to live in or hold meetings in Wyoming. Telephone meetings are permitted. One person may hold all director and officer positions and directors and officers do not have to be stockholders.
Some say you can have the LLC with any rental income coming into a private bank account (though how that works I don't get. How can a company own a property with the rental income going to a private account?).
The LLC is the legal owning entity but you call the managing agent and tell them to find a tenant. They say 'where does the rent money go?' and you give them your bank details. The managing agent/tenant don't need to know any details about the LLC until they try to sue you.Just guessing.
can I ask why you discounted delaware
I understand the question but from the start you discounted delaware
what was the reason for this2 reasons.
1. From all that I've read, Delaware, generally speaking, really only lends its full benefits to larger corps.
2. Delaware has _long_ been known as a tax " "…. dodge …" " state and so raises an immediate flag should anything ever happen such that someone wants to look into you or your affairs.Happy to take the quieter route.
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