Ask a Business Lawyer. Get Business Law Questions Answered ASAP.
Thank you for using JustAnswer. I am researching your issue and will respond shortly.
Can you tell me what state is your primary place of business?
we will licesne software around the untied states. The nexus of the transaction is on a hosted server in 3 states. My residence is in VA and the first contract will be out of TN
How many owners?
3 one majority, two subs
Are all of the owners US citizens or at least permanent residents?
And is there going to be any desire to offer benefits just yet (401k, medical, dental, etc...)?
Or just a distribution of profits?
distributions only at this point
If that's the case, the best structure would probably be an LLC. An S corp (which you can always convert to at a later point in time) would be better if you wanted to have deductible benefits, but when it's just distributions, an LLC will be just fine. The good thing about an LLC over corporations or other limited liability entities is that they don't require as many "formalities", and so it's much easier to protect your limited liability status. It's certainly better than going without any limited liability structure, and would probably be the cheapest and least maintenance required to keep it going.
I would suggest a Nevada or Wyoming LLC, since you're going to be doing business all over, since they have the fewest requirements and don't have income taxes for the LLCs.
Hope that clears things up a bit. If you have any other questions, please let me know. If not, and you have not yet, please select the "accept" button. If you have already clicked "accept", or if you will in the future, please let me know so I can track these for my own reports and customer satisfaction stats. Thank you, XXXXX XXXXX good luck to you!
So the wyoming entity would on have to pay federal income tax not state tax. Since i live in VA, i would have to pay tax on the distributions in VA correct?
Yes. LLC is a pass through entity, meaning that you report it on you personal income return.
great thanks. Thats where i was heading!! Where is best place to get an LLC stockholders agreement?