How to Set Up an LLC the Smart Way—Without Wasting Time or Money
Where Should You Register Your LLC? (Hint: Probably Not Wyoming)
Setting up an LLC seems simple—file one piece of paper and you’re good to go, right? Not quite. If you’ve ever Googled “best state to form an LLC,” you’ve probably been misled.
In this episode of the Main Street Business Podcast, tax attorney Mark J. Kohler and self-directed IRA expert Mat Sorensen unpack one of the most common and misunderstood questions for business owners and real estate investors: “When should I register my LLC in another state?” This episode is essential listening for real estate investors, side hustlers, and small business owners who are expanding across state lines or simply want to avoid costly mistakes.
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Key Takeaways
1. Register in the State Where You're Doing Business
If you're running your business in Oklahoma, your LLC should be formed in Oklahoma. Don't fall for the hype about states like Wyoming or Delaware unless there's a strategic reason. Most small business owners should stick with their home state.
2. When to Register in Another State
You need to register your LLC in another state if:
- You own real estate in that state
- You hire employees in that state
- You open a physical office or warehouse
- You conduct significant operations there
Failing to register in the right state can lead to serious penalties—like being unable to sue in that state or getting hit with fines (California, for example, charges $20/day up to $10,000).
3. Rental Properties Require Special Attention
Own rental property in a different state? Your LLC must be registered there. You can form it in your property’s state or set it up in another (like Wyoming) and foreign register it where the property is located.
4. Operating in Multiple States? Know Your Options
You can register one LLC in multiple states through foreign registration, but you might want separate LLCs for asset protection. If you own properties in Texas and Oklahoma, having separate LLCs can shield your equity and simplify liability.
5. Employees Trigger State Registration
If you hire remote employees in another state, you’re considered to be doing business there. That means you must register your LLC, get a payroll ID, and maintain compliance.
Mark & Mat’s Pro Tips
- Don’t use your home address when registering—use a registered agent or virtual mailbox for privacy.
- Keep a master spreadsheet to track entity registrations and annual fees.
- Main Street Business Services can help with registered agent services, entity maintenance, and compliance.
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