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Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Business Law
Satisfied Customers: 91036
Experience:  All corporate law, including non-profits and charitable fraternal organizations.
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Is there any benefit to incorporating (as an LLC) a service

Resolved Question:

Is there any benefit to incorporating (as an LLC) a service business in Wyoming, if we will be doing business in Florida and Texas?
Submitted: 1 year ago.
Category: Business Law
Expert:  Law Educator, Esq. replied 1 year ago.
Thank you for your question. I look forward to working with you to provide you the information you are seeking.

It all depends on what type of business you are conducting as to whether or not you would gain an advantage to the NV or WY LLC. What type of service? Is it physical service that is conducted physically in FL and Texas?
Customer: replied 1 year ago.

It would be a roofing business, so yes, the business would physically take place in those states. I've read different kinds of things, some stating that you will be paying fees to register within those states anyway, so just bypass WY and register in one of those states and that if you did encounter any lawsuits that it would be the judges decision on which state's laws would be enforced. One aspect, however, that looked particularly interesting in our situation was that (supposedly) no matter what percentage of shares a person owns, that you can distribute profits in whatever percentages the company would like. We do have alot to consider, so your input is valued, but also what professionals would be the best to speak with in this situation? A tax attorney, a cpa, or some other expert? Thanks!

Expert:  Law Educator, Esq. replied 1 year ago.
Thank you for your response.

In this type of business, forming a WY or NV LLC is not very helpful because in addition to the WY or NV LLC you would have to then register as a foreign LLC doing business in both Texas and FL and incur additional fees. You also do not really save on taxes because you have to pay any applicable tax in both FL and TX for work done there and as FL or TX has no personal income tax you are not saving there either. It is best to register in FL or TX and then register as a foreign LLC doing business in the other state.

In both Texas and FL, with a written operating/membership agreement for the LLC, you can still distribute profits in whatever percentages stated in that membership agreement. This is not just something unique to WY or NV. Thus, if you would form your LLC in Texas, for example, with your foreign LLC registration in FL, you would have a written membership agreement designating among other things percentage of membership and distribution of profits or distribution of losses and even pay for work done.

The CPA can advise you best on the taxes paid. However, be cautious. Many CPAs will say it is best to take profits from the LLC and not take pay as a salary, but what happens in that case is that if you have a period where there is no business and you are not an employee of the business taking a salary or wage and paying unemployment taxes on the members who are working for the LLC you would not be able to collect unemployment benefits. It is a trade off and while you might save some in taxes by taking only profits from the business as a member (like gains from shares), you would lose the ability to collect unemployment in event of an unforeseen circumstance if business drops off and you have no work (owners of an LLC can collect unemployment contrary to belief of some, as long as they can prove there is no work through no fault of their own and have sought work to no avail).



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Law Educator, Esq., Attorney
Category: Business Law
Satisfied Customers: 91036
Experience: All corporate law, including non-profits and charitable fraternal organizations.
Law Educator, Esq. and 4 other Business Law Specialists are ready to help you

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