Does WY LLC need to file as foreign corp in GA if doing business development?

Why don't you make your life simpler and register your LLC in Georgia? Typically, an LLC is treated as a proprietorship or partnership with no tax consequences of its own, so what would be the advantage of putting the LLC in Wyoming?

John: There are several reasons that I am looking at Wyoming for the creation of the LLC. The state is very "business-friendly". It has no personal or corporate income taxes; it provides superior asset protection properties versus other states; and it allows for greater privacy for shareholders. Wyoming also allows the formation of a Close LLC that minimizes paperwork and formalities even more than traditional LLCs available through other states.

While it may be simpler to form an LLC in the same state as the folks doing much of the work, in my view the increased complexity is worth the advantages of doing business with folks that want your business and the Wyoming legislature has repeatedly proven they want small businesses to form there.

Do you happen to know the answer to my original query regarding the foreign registration requirement?

Thanks for taking the time to respond.

"BizDev" wrote

If there are owners or employees of the LLC doing business in Georgia (ie: physically located here), then yes, the LLC must register in Georgia and file Georgia tax returns, LLC members are then subject to Georgia taxes on that income generated here. NEXUS does not attach if you have third-party vendors making those sales for you.

You can't be domiciled in the state, register in another state, and pretend that your income isn't subject to this states tax.

Yes, this LLC would have to register in both Wyoming (because that's where the LLC will be registered) and GA (as that's where the members work). In GA I don't think the LLC pays any direct tax -- unlike CA where the LLC must pay $800 as well as an LLC fee. Now the income and expenses of the LLC are put onto federal form 1065, as there are many members, and the net income gets reported on the individual members

1040, as well as the GA individual return form I think GA-500. So it doesn't really matter where the LLC is located for tax purposes because the net income of the LLC will get reported on the individuals' tax returns. So might as well register in GA only.

Even though some states have no corporate tax, it is still necessary to file an annual registration. So you would have to pay this fee in both states. In Wyoming it is $50 per year.

It only makes sense to register a business entity in another state or country if the entity is a C corporation. Then the employees can get a salary, and the company can keep the remaining money and have low or no corporate taxes -- but beware of the personal holding company tax.

Reading my post again, it seems that only for tax purposes it makes no difference where the LLC is registered as the tax will be the same either way. Locating your business entity to save on taxes only makes sense for C corporations, not pass through entities like S corporations and LLCs.

But there may be other reasons to pick a Wyoming LLC, such as better asset protection. But if your company is sued in GA, which state's laws apply? It is handled in federal court?

Paul, Thank you for your response. If the company is physically domiciled in the state of Wyoming but 1 or more employees are telecommuting and their activities primarily consist of solicitation and "deal making" on behalf of a client under a non-exclusive business development representation agreement and those employees reside in Georgia, I figured that the employees would be paying GA tax on their wages but the company's earnings, which would be a percentage of the deal, would not be taxed as the actual revenue was not earned in the state of GA, the deal would always be consummated between 2 parties outside of Georgia.

Does your earlier opinion still hold?

Thanks for your input.

"BizDev" wrote

It's possible that the employees "home office" is considered the corporate office, or at least one of them. Other states are calling an employee's in-home office company offices for nexus purposes, licensing, reporting, filing, and tax paying purposes. Georgia isn't all that different, although it's more of a legal issue than one of tax.

As for nexus, company employees physically in the state create nexus in most cases (time in state seems to be the ruling factor). This is true almost anywhere and applies to traveling salesmen, servicemen, and telecommuters. If the company employee is here, then some portion of company profits are taxed here.

domiciled elsewhere, maybe entirely in Georgia. Even so, the proration of income among the various states generally follows a ratio based on property, plant and equipment in-state -v- everywhere, sales or gross revenues in-state -v- everywhere, and payroll in-state -v- everywhere. So if the ratio looks like 100% PPE in Georgia, 100% sales generated in Georgia, and

100% of the payroll in Georgia, then all the profits will be taxed to Georgia.