My scenario: I currently reside in CA. However, I will be locating to the state of Washington by the end of 2012. I (no other employees) am starting a 100% online service-based company, which will be operated only out of my home.
I would like to form an LLC in a neutral place, primarily because I will be moving to Washington eventually and because California is NOT a friendly state when it comes to business formation costs, etc. - I would not want to have to deal with re-forming in Washington when I move there. I will either form my LLC in Wyoming (leaning more towards here because it is the cheapest), Nevada, or Delaware. I realize that many of you would probably encourage me to just plain form my LLC in California, but again I do not want to do this because I will be moving.
I understand that in order to do this I will have to undertake the following steps:
- Form LLC in Wyoming, Delaware, or Nevada, pay all related filing fees and other costs (i.e. obtain registered agent, etc.)
- Register as a Foreign Business for the state of CA since this will be where I am physically located. (I am aware that I will have to pay $800/yr for franchise tax and that there is no way around this).
A. Since I will form in either WY, NV, or DEL, file as Foreign business in CA - will I need to register/file for the following in CA since this is where I will physically be doing business?:
a) Local tax registration certificate (for the city I live in, I'm assuming) b) Business License (for the city I live in, I'm assuming) c) Any other misc. permits/licenses required to operate my web-based home business?
or would/could I register for these in the state I form the LLC in?
B. Regarding taxes - I will elect to be taxed as a partnership. (I am aware that most will advise me to talk to a tax attorney of sorts, however I would still like to ask here) - please let me know if I am understanding this correctly. I will have to do the following:
a)pay annual franchise tax to CA regardless of business profitability ($800 - yuck) b)pay income tax on my business's profits (per the flow-through nature to my personal income tax statement)
Is there anything I am not accounting for with respect to taxes?
C. Is one state (DEL, WY, NV) better than the other to form my LLC given the nature of my business (100% online, service, home-based)?
I really appreciate any information anyone can provide. It will be super helpful in determining what the next steps are for me. Thanks in advance!
Please note: I am not interested in being talked out of NOT initially forming in California. I understand that the way I want to do it may seem like more work to form my business right now, but in the long run I think it is the simplest/most optimal option for me.