Out of state LLC formation

[Brahm Kiran Singh]

I live in California and am thinking of purchasing some property in Virginia. I want to keep the property under it's own LLC. The question I am mulling over is - which state to establish the LLC in? Is owning rental property which gives income, considered 'doing business' in a state? My current understanding is that in that case I will be double taxed if I opened an LLC in California and own rentals in Virginia. What do other people do who invest out of state?

[Worth Styles]

Depends on if you're only going to do business in VA with that LLC or if you'll also invest in CA. If that's the case, then it's best to incorporate in your home state. Single member LLCs are disregarded entities for tax purposes. Meaning you'll be filing taxes as a self-employed individual, and you'll be double taxed with or without it. If your business is investing in rental properties then yes, you are "doing business" in that state.