Starting a LLC but own properties in multiple states

[Hector Lewis]

Hello,

I am going to start a LLC but I am not sure what state I should 'open' it in. Do I open it in the state of where I live in or in one of the states of one of the properties that I own?

Thanks,

Hector

[Luis Alvarez]

@Hector Lewis from an estate planning/asset protection background I'd say "it depends" (to echo the comments above that not one size fits all), but it depends on the elaboration to your question. Are you asking where do you establish an LLC which will serve to hold your property(ies) or the LLC which will serve as your overall business entity.

Firstly, we typically set people up with a "holding" LLC, formed in your home state, because that's where you live and "receive income". So, for state tax compliance (typically) you will want to have your overarching business entity in the state in which you reside and file your state taxes.

Secondly, you would want sub LLCs to own properties, with the LLC being formed in the state where the property(ies) is/are located. (EG you have a rental property in TX, an LLC in TX should be formed and then the property transferred into that LLC). And yes, we recommend establishing LLCs in various states because having a TX property held by a (for example) CA LLC will not avail your TX property to the laws and protections of TX property law. And with real estate, the commanding laws are state-based.

But most importantly, LLCs are great ways to limit your liability...but ONLY if they are set up properly and maintained properly with the relevant governing agencies. When things are designed and set up properly, you can have a solid asset protection structure, but speaking from experience, a small percentage of attorneys and CPAs know how to structure these.  Be sure to do your due diligence and ask what their clientele looks like and ask to see model asset protection mock-ups.

Feel free to chime back if you have any follow up questions.