Taxation on internet LLCs - which state to establish one?
A friend will give me a website which makes profits by directing visitors to merchant sites. But he told me I should start an LLC before I acquire the website.
I am an Arizona resident, but I'm going to school in the Bronx, New York. Somebody told me that I could open my LLC in Arizona or any other state (like Nevada) as long as I have a mailing address there, to avoid the heavy and complicated tax laws of New York. I'm not sure this is the case (I live here long enough that I still have to pay state AND city taxes like a NYC resident, even though I'm not. So wouldn't I have to pay a New York tax on any LLC profits?)
Please advise on which state I should open the LLC in, and how I should go about it. . . Thanks!
2 Answers from Attorneys
Re: Taxation on internet LLCs - which state to establish one?
If you are a resident of New York City for income tax purposes you will be required to report the income from a LLC whereever it is formed.
If the LLC is formed in New York or Bronx counties, it is very expensive but no more complicated than elsewhere. Strange as it seems, the cost in other counties will be substantially less.
The LLC should be formed where the business is located.
Re: Taxation on internet LLCs - which state to establish one?
You will be taxed where you reside. Since
you own the LLC, its income will be taxed
to you there, regardless of where the LLC
operates unless you elect to treat the
LLC as a corporation for tax purposes. If
you were going to do this, why not just
form a Subchapter S corporation? This
could cut down on a bunch of costs.
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