How does my LLC's address affect my tax requirement if I'm planning to do "pass-through" taxation?
December 14, 2010 9:58 AM Subscribe
My roommate and I are planning to register an LLC (a web startup) in Pennsylvania. We live in Philadelphia and work from home. We were told that if we register the LLC at my roommate's parents' house in the suburbs, we can avoid paying the higher city taxes.
Two questions:
1. Will this work if we are planning to use pass-through taxation for our LLC? We will be filing our personal taxes in Philadelphia. As I understand it, pass-through means that the LLC is ignored for tax purposes, so it's address shouldn't matter. Is that correct?
2. Is this something we could get in trouble for? I'm not completely clear on how "place of business" is determined. Our business is completely online so we don't really have a location.
Two questions:
1. Will this work if we are planning to use pass-through taxation for our LLC? We will be filing our personal taxes in Philadelphia. As I understand it, pass-through means that the LLC is ignored for tax purposes, so it's address shouldn't matter. Is that correct?
2. Is this something we could get in trouble for? I'm not completely clear on how "place of business" is determined. Our business is completely online so we don't really have a location.
When you consult that tax attorney/accountant (highly seconded) ask about Delaware, which tax shelters more corporations than most states.
posted by eaglehound at 10:35 AM on December 14, 2010
posted by eaglehound at 10:35 AM on December 14, 2010
If you live in Philadelphia, you end up paying the city wage tax no matter where you work (as I work from home for a company based in San Francisco and still get dinged with city wage tax). But yes, talk to an accountant.
posted by zempf at 11:38 AM on December 14, 2010
posted by zempf at 11:38 AM on December 14, 2010
Not an attorney, but again you should be looking at Delaware. Also, get an attorney to explain the pros and cons of choosing an LLC vs. an S-Corp.
posted by fremen at 2:48 PM on December 14, 2010
posted by fremen at 2:48 PM on December 14, 2010
Or vote with your wallet and move out of Philly. Seriously.
posted by wkearney99 at 9:40 PM on December 14, 2010
posted by wkearney99 at 9:40 PM on December 14, 2010
This thread is closed to new comments.
This is not the kind of thing you want to be wrong about. If you don't think you can afford an attorney, you can almost certainly not afford getting on the bad side of the IRS or badly miscalculating your tax liability.
posted by toomuchpete at 10:24 AM on December 14, 2010