Attorney · UT · Member since 2025 · 33 posts · 59 votes
1y
Hi Ashish, this is a great question!
Typically an LLC or other business entity needs to foreign file in another state when it is doing business in that state. An LLC will be considered to be doing business in a state if your business has a significant presence or conducts substantial business activities in that state, beyond just occasional sales or isolated transactions.
In both scenarios you describe, the WY LLC is not doing substantial business in another state. It just owns an entity in another state and signs on behalf of it. The HI LLC is the entity actually doing business in either scenario. There is no requirement here to foreign file the WY LLC.
Whenever possible, it is best to keep a WY LLC registered only in WY, as the benefits the state offers often are no longer available if the entity is filed in another state.
One complication you might run into is with the s-corp status. With an s-corp, if you are taking a reasonable salary or any reimbursements, it needs to be registered in the state where you are located. Paying you in these manners would be considered doing business in a state. If you are located in HI, then you would need to register the WY LLC taxed as an s-corp in HI.
Attorney · UT · Member since 2025 · 33 posts · 59 votes
1y
Hi Ashish, this is a great question!
Typically an LLC or other business entity needs to foreign file in another state when it is doing business in that state. An LLC will be considered to be doing business in a state if your business has a significant presence or conducts substantial business activities in that state, beyond just occasional sales or isolated transactions.
In both scenarios you describe, the WY LLC is not doing substantial business in another state. It just owns an entity in another state and signs on behalf of it. The HI LLC is the entity actually doing business in either scenario. There is no requirement here to foreign file the WY LLC.
Whenever possible, it is best to keep a WY LLC registered only in WY, as the benefits the state offers often are no longer available if the entity is filed in another state.
One complication you might run into is with the s-corp status. With an s-corp, if you are taking a reasonable salary or any reimbursements, it needs to be registered in the state where you are located. Paying you in these manners would be considered doing business in a state. If you are located in HI, then you would need to register the WY LLC taxed as an s-corp in HI.
Thank you for the response. I was planning to make HI LLC as s-corp. WY LLC is SMLLC and disregarded so should be allowed to own the HI LLC.
I am located in CA though. As HI S-corp issues me a salary, I assume I just need to include that W2 on my CA return.
Please confirm.
Yes, so long as the WY LLC remains a SMLLC, you should be fine to make the HI LLC an s-corp. Because you live in CA, you will need to register the HI LLC in CA in order to pay yourself a salary. Employing and paying an individual is considered doing business in a state.
Attorney · Las Vegas, NV · Member since 2025 · 69 posts · 91 votes
1y
Hello Ashish,
Entities will generally need to register in all states in which they are paying a salary to employees. If you take a salary from the HI LLC and live in CA, you will likely need to register the HI LLC in CA. Once you start issuing a W-2 you are considered an employee in CA and would be subject to CA tax and filing requirements.
Note: This information is for educational and informational purposes only and does not constitute legal, tax, or financial advice. No attorney-client, fiduciary, or professional relationship is established through this communication.