California law is convoluted and Californian courts slow. That makes doing almost everything with a California LLC more expensive than with a Delaware LLC.
The only reason to form a California entity is if you’re doing business with the state.
> If you live and work in California, you are doing business with the state
In a revenue sense, e.g. if you are contracting with the state. Paying California taxes is about equally easy for a California resident, New York resident or Delaware entity.
Or if you’re operating a small business unlikely to ever need to use the courts or raise outside capital, and the extra ~$300 for a Delaware entity isn’t worth the benefits.
I wonder about this. Suppose you incorporate a LLC in Delaware that buys some stocks, and some houses in Arizona and rents them out. But you live in California. Is your LLC “doing business with California”?
Paul is a California resident and a member of a Nevada LLC. The Nevada LLC owns property in Nevada. The LLC hires a Nevada management company to collect rents and provide maintenance. Paul has the right to hire and fire the management company. He occasionally has telephone discussions from California with the management company in Nevada regarding the property. He is ultimately responsible for the property and oversees the management company. Paul conducts business in California on behalf of the LLC. The LLC must file Form 568.
I had a scenario a bit like this, but not involving any of the states you mention above. So long as I didn't have business nexus (IE: an office, employees, etc) that would come on the radar of the state, it was all clean according to my accountant and lawyer - but there's the rub in that if you have those kind of multi-state issues, you'd better have at least one lawyer and at least one accountant who know those jurisdictions and can actually answer this question.
