Where Should I Form an LLC if I'm an Out of State Investor?

[Megan Stafford]

Hi!

I own 3 properties (5 units) in Arkansas currently, but I live in California. I would love to know if anyone has advice on where I should set up my LLC?

I would like to do a couple of flips in the next 6 months and start putting all of my newly acquired fix & hold properties under the LLC as well.

As far as Arkansas and California go- it's much cheaper to get a business license in Arkansas so I am of course thinking that should be the state to get the license; however, can I still write off my rental payments in California for the portion of my home that is used as an office space even though all of my physical business is in Arkansas? I currently work about 20 hours a week in my home office here in California.

Thanks for any help you may give and I completely understand I should talk to a CPA and lawyer but recommendations are still welcome!

[Michael B.]

Your main LLC should be set up in Wyoming or one of the other states with charging order protection. This main LLC should own one or more LLC's in the state where you invest. Your main LLC has to be registered in CA which will cost you $850 Dollars per year.

Contact Lisa Shults with Corporate Direct (sent you a PM with her phone number). She will be able to help you get this started. It will cost you about $800 dollars per LLC. This way your name will not appear anywhere and you will have maximum asset protection. Just make sure you don't pick a name for the LLC that would give away your personal name.