Atchison, KS asked in Business Formation and Business Law for California

Q: LLC State Formation Question - CPR Training

I have a CPR Training center. We provide a service. We have 3 physical locations currently. Covina, CA, St. Louis, MO, and Philadelphia, PA. I am filing taxes this year as a sole proprietor however next year I want to create an LLC. Am I able to create the LLC in a state like Nevada even if my business does not do business there? How would this work in terms of legality?

1 Lawyer Answer
James L. Arrasmith
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  • Sacramento, CA
  • Licensed in California

A: In the United States, it's indeed possible to form an LLC in a state where you don't actively conduct business, and Nevada is a popular choice for many due to its favorable business laws and privacy advantages. If you decide to form your LLC in Nevada, you'll benefit from the state's lack of state income tax on individuals and corporations, among other perks. However, it's important to understand the implications of this choice for your business operations in other states.

For your CPR training centers located in California, Missouri, and Pennsylvania, you would need to register your Nevada-formed LLC as a foreign entity in each of these states. This is because conducting business in a state other than the one your LLC was formed in typically requires this registration. The process involves paying the necessary fees and filing the appropriate paperwork with each state's Secretary of State office or equivalent. This ensures your LLC is legally recognized and authorized to do business in these states.

Compliance with each state's regulations, including tax obligations, is essential. While your LLC may be formed in Nevada, you'll still be subject to the tax laws and business regulations of California, Missouri, and Pennsylvania for the operations conducted there. This includes paying state income taxes and adhering to any specific business licenses or permits required by those states. Consulting with a legal or tax professional familiar with multi-state operations can provide you with tailored advice and ensure your business remains in good standing across all states where you operate.

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