Invest in il RE and Use Neveda based LLC Any downsides???

[12sectruck]

I currently reside and invest in the Chicago Il area. I found an attorney that specializes in forming LLC's and Corporation in Nevada. I spoke to him about using an LLC registered in NV but still continuing to reside in Chicago. He assured me that would not cause any problems. Apparently NV's fee are cheaper($500 vs.. $125) for filing. Also NV has more tax benefits as well. Has anyone used a different state other than the one you live in to form you LLC? Would this cause any problems down the road?? Any input is appreciated.

 

[SeattleCPA]

If your Nevada LLC invests in real estate outside of Nevada, you will also need to register as a foreign LLC in that state. Typically, the foreign registration fees mirror the "domestic" fees. This sometimes mean that you can pay your home state , e.g., $200... or you can pay Nevada $100 and then pay your state the $200.

Probably the thing to do is ask this attorney about the foreign registration required for the states in which the real estate is located.

[bmanuel77]

I regret forming a corp. in NV.  Cost me $1200.00 and not worth it. 

Although you don't have to pay state income taxes in NV, you do have to pay them in the state you are investing in RE. 

If you really want to do this, you should weigh out the difference in the fees...foreign registration, and paying a registered agent for your business in the state of NV.  In order to obtain a foreign registration, you will also need to pay for a certificate of good standing for your business in the state of NV which costs $100.

[12sectruck]

Basically it's very similar to when you purchase a car out of state. One way or another your resident state will not be denied their share of taxes. Sounds like it's more trouble than it's worth. I'll just stick with registering in Il where I live. Thanks again for the valuable input.

[mcwagner]

Yep.  those people who sell NV LLCs are good at their job:  separating you from your money.

[4R Management]

12sec,

I too am in the Chicago area. Yes some people form Nevada entities and even Delaware entities, but to do business in IL you must be registered here in IL, so either way, you are paying for it. The hassled of a CPA that is here in IL but knows the loopholes and rules of taxes in NV is not worth the savings you MAY find that way.

Just file with Jesse White (our secretary of state) and start doing business! The sooner you register, the sooner you can start getting lined up for Unsecured Biz lines of Credit.

[BLL]

The laws of the state where the property is located govern the property. You will not be able to import NV law into IL, except for internal member disagreements. External parties will use IL law.

The benefits of an LLC come from the operating agreement, not the state of organization. A properly drafted OA will provide more protection than LLC-friendly state law. Be aware NV entities are getting more scrutiny from the IRS because of increased tax evasion and fraud. NV requires disclosure of officers, an annual fee, and business license. There are states who only charge the set up fee with no annual reporting and don't carry the NV stigma.