LLC · Foreign LLC

I need help with forming a multi-member LLC with all members in different states

AAAAAA BBBBBBBB Technical Lead, Architect, and Software Developer at The Boeing Company

December 29th, 2014

I am a member of a soon-to-be-formed four member LLC.  Each of the members resides in a different state (VA, TX, MO, WI).  We're content on forming an LLC because we're not seeking any funding in the near-to-medium term (if ever) and, in the short term, are going to be self-funding our operations.

I've read the many FD discussions on LLC vs C/S-Corp and it only reinforced our decision to stick with an LLC.  Any conversion would be *many* years down the road, if ever at all.

At the moment I'm leaning heavily towards forming in Wyoming vs. any one of our individual states (already have a potential registered agent in WY).  

As noted in other discussions, forming in a state other than our "operating state" would incur some extra overhead since we'd have to register in the state we're doing business anyway.  The problem is that we will each "conduct operations" in our own state, which makes me think that, regardless of where we form our LLC, we'll each have to register in our own state anyway.  One person could take advantage of having the operation in their respective state, I suppose.  

I have formed (and dissolved) a Virginia LLC in the past and it was pretty straightforward because both members were initially VA residents, so that's a possibility, but I'm trying to keep the burden even among everyone.

Does anyone have advice on how to handle multi-member LLCs with each member conducting business in another state?  And by "conducting business", I mean we all work from home in our respective states.


Anonymous

July 22nd, 2015

Tax-wise it'd be a little messy and look like this. 
Because your LLC has revenue from 4 different states, it's going to have to file a state tax return in all 4 states.   Each of the 4 LLC members would also have to file 4 state tax returns.

Definitely hire a CPA with multi-state tax experience for this.

Eric Burleson Product Manager-Program Services at Invodo

December 29th, 2014

I would form in whichever state has a court system most favorable to your entity. That's why Delaware is such a popular state in which to incorporate. Since you will have to incite those extra registration costs anyway, that's where I would do it. Speak with an attorney experienced in cross-state operations. They can advise you on what criteria would be most relevant, whether it be taxes, legal precedents relevant to your industry, ownership laws, etc. There are likely to be many factors that could affect your most favorable outcome. Using a multiple attribute utility tool to help decide could be useful as well.

Ty Jordan ATTORNEY at JORDAN LAW FIRM, LLC (GA)

December 29th, 2014

Adam, I may be able to assist you in determining the appropriate state of formation. Please feel free to contact me. I'll be out of the office for the majority of this week, but will be back in January 5. Best regards, ty Ty Jordan Jordan Law Firm, LLC Suite 1200 1170 Peachtree Street NE Atlanta, Georgia 30309 ty@tyjordanlaw.com 404-474-4033 Phone 770-216-2013 Confidential Fax IRS Circular 230 disclosure: To ensure compliance with requirements imposed by the IRS and other taxing authorities, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. ___________________________________________________ NOTICE: The information contained herein is of a general nature and is based