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I want to form multiple LLCs. Is the following LLC formation…

I want to form multiple...

I want to form multiple LLCs. Is the following LLC formation scenario good or bad? One domestic LLC in California for real estate services. One foreign LLC in Wyoming for an online clothing Shopify store, where I would be working virtually from California. One foreign LLC with an EIN in Wyoming as a holding company for both LLCs mentioned above. The Holding company would receive all profits from the LLCs and I would be paid only by the LLC Holding company in Wyoming. The out of state LLCs would have a foreign business address (virtual address by Spaces, WeWork, Regus, etc.). However, I would be physically living and working at home in California and reporting the money as income from an out of state employer. Is this legal and actually going to save me on taxes or will California need me to register the foreign LLCs in the state. How does this scenario play out? Should I just form all three LLCs in California? The difference to me seems if they are all in California I would pay the minimum $800 fee for each additional LLC while in Wyoming the fee would be zero.

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1/4/2021

Financial Professional: bkb1956, Finance Enthusiast replied 2 years ago

bkb1956, Finance Enthusiast

Category: Finance

Satisfied Customers: 30,828

Experience: IRS Enrolled Agent, 20+ years of experience in tax preparation with associated finance experience.

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Welcome to Just Answer. My name is ***** ***** I am an Enrolled Agent credentialed by the IRS. I will be happy to assist you today.

If you are a CA resident and form an LLC in another state, CA requires that you register the LLC as a foreign entity doing business in CA.

So yes, you will still pay the $800 franchise tax fee.

Customer reply replied 2 years ago

Okay and what about the Holding Company. If the holding company doesn't necessarily conduct business except that it manages the LLC and pays Salaries. Does the holding company have to be in California also? Also, The online Shopify store wouldn't do business in only CA it would sell items on a nationwide level.

Financial Professional: bkb1956, Finance Enthusiast replied 2 years ago

Because YOU are a resident of CA, all of the LLCs would be registered as foreign entities doing business in CA.

Customer reply replied 2 years ago

Are there exceptions to this? Such as filing as C Corp / S Corp?

Financial Professional: bkb1956, Finance Enthusiast replied 2 years ago

There are no exceptions.

CA is notorious for being the most greedy when it comes to state taxes.

Customer reply replied 2 years ago

Also, are the foreign entities doing business in CA required to be the ones paying me directly? Would I have to register an EIN for both Holding companies foreign and domestic or only the CA one paying me directly? Also, what if the foreign Wyoming company keeps the money and other assets? Does CA really need to know the assets of the foreign company?

Financial Professional: bkb1956, Finance Enthusiast replied 2 years ago

The LLC you actually form gets the EIN.

Registering as a foreign entity does not create a new entity.

Customer reply replied 2 years ago

That's good to know. Thank you. I'm new to this and they never taught me any of this at the university. I work full time in CA and also do real estate services part-time and really want to finally get my LLC. Do know of any resources I can use to learn more tips and advice?Actually, two more questions popped up. Do I really need a registered agent for each LLC? Because I prefer being my own representative. And second, what if there is an employee living in a foreign state and conducting all online business within that state. Would I still need separate LLCs at that point? Basically, does all this depend on the actual owners home address?

Financial Professional: bkb1956, Finance Enthusiast replied 2 years ago

You can be the registered agent. It does not have to be a third party.

If you have an employee in another state, you are conducting business in that state and would also register as a foreign entity in that state.

Customer reply replied 2 years ago

I meant to say in Wyoming. If there is an employee in Wyoming doing all business for the registered Wyoming LLC. Do I still need to register the LLC in CA if I'm getting paid by the Wyoming LLC? In this scenario I would not be working from California at all, I would just be getting paid from a Wyoming LLC.

Financial Professional: bkb1956, Finance Enthusiast replied 2 years ago

You would still register the Wyoming LLC as a foreign entity doing business in CA.

Customer reply replied 2 years ago

That was my last question. Thank you!

Financial Professional: bkb1956, Finance Enthusiast replied 2 years ago

My pleasure.

bkb1956, Finance Enthusiast

Category: Finance

Satisfied Customers: 30,828

Experience: IRS Enrolled Agent, 20+ years of experience in tax preparation with associated finance experience.

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