Legal Question in Investment Law in California

I am not a tax specialist, but I can tell you that in order to do business legally in California as a Nevada LLC, you will need to register and qualify to do business in California as a foreign LLC. That will result in you paying California taxes on your operations located in California. Taxation is generally based on where business is conducted, not where a business entity is domiciled. There are often significant securities and corporate governance issues that favor forming an LLC or corporation in one state over another. For example Deleware has state securities laws that are very favorable for corporations, boards of directors and majority shareholders over general shareholders, which is why many publicly traded companies are incorporated there. It is not for tax benefits. So unless you were to actually conduct your business in Nevada, you will not gain much tax advantage that I am aware of by forming your LLC there. If you want a more definitive answer, however, I suggest you ask a tax accountant rather than business and investment lawyers, as they will be current on the details of your issue. Given the business you are forming you should be establishing a good relationship with an accouting firm at this point anyway.

You need to think carefully and consult an attorney before deciding where to form your LLC. Otherwise, when someone wants to sue you, they may sue you in Nevada, and you will have to put your whole life on hold at great expense and great disadvantage to have to go to Nevada to litigate. I have experience forming LLCs. You can contact me for a free consultation.

Best,

Daniel Bakondi, Esq.

[email protected]

415-450-0424

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Most lawyers will tell you, if there are any business connections to California, such as doing business using a California IP address, California will deem you to be transacting business here. Attempts to start an entity in another state, like Nevada, when the business is really transacted in California, just to escape California taxes doesn't work. Consult with an attorney in your area for specific advice.

Kevin B. Murphy, B.S., M.B.A., J.D. - Mr. Franchise

Franchise Attorney

Kevin B. Murphy, B.S., M.B.A., J.D. - Mr. Franchise

Franchise Attorney