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If I create an LLC for an online company in the state of Nevada as a foreign entity and pay for a registerd agent, do I pay income taxes?

  • I don't plan on doing any shady business, but since Nevada has no income tax and an LLC is a pass through entity, how do I report taxes?  I live in the state of PA and operate my business from the state of PA.  I am only using my computer for my online Internet business (affiliate marketing).  Or do I pay only PA income tax?  From my understanding the only thing I pay for is the Nevada filing fee and a registered agent to represent me as a foreign entity.  I understand getting a bank account for the business will be harder, but since my company is all online, can I just use an online bank like ally bank to get approval?

  • Answer:

    1. You pay income taxes in every state in which you (or your LLC or your separate Corporation) legally operates or "does business." 2. An LLC is created by state statue. It is a disregarded entity in the eyes of the IRS. That means the IRS completely ignore the fact that the LLC exists, and treats any and all assets liabilities, business operations, income and losses as though you are a sole proprietor. From what you described, the fact that you live in PA and operate your business in PA, I see no reason to form a Nevada LLC. your 2 basic options: A.) Create Nevada LLC with NV Secretary of State. Pay annual filing fees. Hire a registered agent. Pay him/her/them annual fee. Register as a foreign LLC in PA with the PA Secretary of State. Pay more annual filing fees. No PA registered agent needed. B.) Create PA LLC with PA secretary of state. pay annual filing fee. You don't need resident agent because you live there (unless you want some other business address, in which case you'd be better off just getting a P.O. box down the street). In both situations, as a sole proprietor in the eyes of the IRS, you will pay: -Federal income tax -Self-employment tax -PA state income tax (-PA local income tax depending on where you live) You can file an election to be taxed as a C corp or S corp by filing Form 2553, but only do this if you know exactly what you are doing and/or have spoken with a tax professional. bottom line: skip Nevada LLC and just make a PA one. I recommend getting a new EIN from the IRS and making a separate bank account to keep your books straight. IRS wants to see separation of personal assets from business assets.

Daniel Hobbs at Quora Visit the source

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My good friend Mr Hobbs is right on point. The pass-through "benefit" of the LLC passes that income to you in PA - and you pay all your taxes as a PA resident on ALL of your income. I have actually been in the business of setting up entities in Nevada since the 80's, and I could never find any justification for this oh so common and useless structure. If filing an LLC is a bad idea what is a good idea? Well if your business is going to be successful then I would avoid the business structures that are "Designed for Failure", in any state. The LLC is one of those "designed for failure" structures. So are partnerships, both limited and general, sole prop and s-corps. "Designed for failure? What, I've never heard that. And I've talked to a lot people about LLCs" is that what you are thinking? You have heard it, and you've heard it from the people that are trying to promote them. Didn't you hear: "The LLC allows you to pass losses to the owner. " are losses a sign of failure or success? "You don't want to have to pay taxes again when you close the business, do you? " Who closes a successful business? This of course is only the beginning of the discussion. You can contact me directly to explore the entire world of successful business. Here is one more thing to consider: Name 3 or 10 of the most successful businesses you can think of. How many of those are LLCs? This expose normally triggers passionate opposition from those that have never actually considered these details. I am happy to help anyone get past their erroneous preconceptions.

Rick Fritzler

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