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Welcome and thanks for your questionIf you live in California and will primarily be conducting your business there, I recommend that you set-up your LLC in California. California does have a high minimum LLC tax compared to other states, but I still recommend that you setup there.The idea that you can set-up in your LLC in another state with lower taxes and avoid paying tax in the state where you will be conducting most of your business is, unfortunately, a common misconception. Even if you set up your LLC in another state, you would still need to register it in California because you have a sufficient connection to that state. In multistate taxation, this concept is known as nexus. In your case, the connection is that your primary place of business is located there.I understand that you plan to expand into other states in the future. Keep in mind that if you establish nexus with other states in the future, then you may need to register with those states. In most states, Internet sales is not currently enough of a connection to create nexus, but this is currently a hot issue within the world of multistate taxation, so that may change in the future.Please let me know if you have any follow-up questions or need any clarification and I will gladly assist you. Have a wonderful evening!
Can you tell me how California's taxes compare between an LLC and a sole proprietorship? Are the tax benefits different at different levels of income? Are the liability limits more advantageous for one or the other?
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