What state to form an LLC?

[Derrick Lloyd]

I am purchasing my first property as a buy and hold in St Louis, Missouri. I live in California. I think that transferring the property to an LLC is a very good option for asset protection, especially since I own a primary residence, have retirement savings and other savings (for the next real estate deals!).

My question is which state I should form the LLC in? I am almost seeing no benefit to doing it in CA. The Missouri costs look to be $25 for name registration and $50 for submitting and possibly another fee for registering it as a foreign LLC. The CA one costs $70 to register AND has an annual fee of $800 a year (MO has no annual fee).

Am I missing anything crucial as to why I should form the LLC is CA instead of MO?

Thanks!

[Justin R.]

@Derrick Lloyd If you live in CA and lift a finger related to your MO-registered LLC (like, you know, making a phone call to a property manager), CA claims you owe it $800 per year. It's up to you to decide whether you want to play Russian roulette by not disclosing that on your tax returns. @David Faulkner is right.

And I also concur with @Cody L.. Skip the LLC unless you need it for commercial loan purposes or you have a true company operating at a large scale. That advice isn't just digital words - it's where I've landed after much headache, and it's very likely I've got quite a bit more to lose than you do at this point in your investing journey.

Also, can we please stop talking about San Diego real estate and cash flow vs appreciation?  There's gotta be some other interesting things to dive into, no?  When we feel the urge ... resist, resist, resist.  :)