Learn

Language:

What Are the Requirements for LLC Partners to Be Located in Different States?

By Jacinta Sherris

Published on 2 Apr 2023 Updated on 22 Aug 2024 4 min read Updated on 22 Aug 2024

Starting a business is an exciting endeavor, but it may become a challenge when your potential partners live in different states.

Running a Limited Liability Company (LLC) with partners in different states is possible but requires careful consideration. 

Some rules and regulations dictate how LLCs can operate with partners in different locations, and not following them can result in serious consequences.

To ensure that you and your partners are on the right track, get started with doola’s business formation and compliance services to navigate the complexities of running and growing your business.

Before starting a multi-state LLC, keep reading to learn more about what you need to know.

Definition of an LLC Partner

A Limited Liability Company, or LLC, is a business structure that offers limited liability protection to its owners, or partners.

LLCs are easily customizable and can be suitable for small business owners and large enterprises.

An LLC partner is an individual or an entity that invests in the company and becomes a co-owner.

The requirements for LLC partners to be located in different states can vary depending on the state’s laws and regulations. 

Requirements for LLC Partners Located in Different States

A few requirements must be met when forming a Limited Liability Company (LLC) with partners who are located in different states. 

The LLC must be formed within one state and have a registered agent in each state where the LLC has members or does business.

The Registered Agent is responsible for receiving legal and tax documents on behalf of the LLC and forwarding them to the appropriate member.

Another important requirement is creating an Operating Agreement, which outlines the terms of the LLC’s management structure and each member’s rights and responsibilities. 

While each state has its laws and requirements for LLC formation, there are a few common elements that all LLCs must adhere to.

One of the main requirements is filing Articles of Organization with the state’s Secretary of State. This document outlines basic information about the LLC, such as its name, purpose, and registered agent.

In addition to filing the Articles of Organization, LLC partners will also need to decide on who will manage the LLC.

There are two options for management: member-managed or manager-managed. In a member-managed LLC, all members have equal authority to make decisions for the business.

In a manager-managed LLC, one or more managers are designated to make decisions on behalf of the LLC.

When it comes to multi-state LLC formation, LLC partners must research and comply with each state’s specific laws and regulations in which they plan to operate.

This includes obtaining any necessary business licenses and permits, registering the LLC for state taxes, and adhering to state labor laws.

LLC partners must do their due diligence and seek legal advice to ensure they meet all the requirements to operate their LLC in multiple states.

Taxes of LLC Partners in Different States

One key advantage of forming an LLC is that it allows partners to be located in different states.

However, each state has its laws regarding tax and business entity requirements. LLC partners must ensure they comply with the income tax, franchise tax, and other requirements. 

From a tax perspective, LLCs enjoy the benefit of pass-through taxation, which means that the income earned by the LLC is passed through to the individual members, who report their share of the income on their personal tax returns. 

However, the Internal Revenue Service (IRS) requires the LLC to file its tax return, including information such as the LLC’s income, deductions, and credits.

It is recommended that LLC partners seek legal guidance and the advice of a tax professional to ensure that they comply with tax regulations and are structuring their business in a way that is most advantageous for their specific situation.

How to Form an LLC with Partners in Different States

Forming an LLC with partners in different states is not entirely different from the original process of forming an LLC.

An LLC is a business structure that provides its owners with personal asset protection and tax benefits. When forming an LLC with partners, the owners are called “members.”

The first step in forming an LLC with partners in different states is to research the laws in each state.

Each state has its requirements for forming an LLC, and ensuring that the LLC complies with all relevant laws is crucial.

Some states require an LLC to have a registered agent, while others do not. It is essential to research and understand the requirements before proceeding with the formation of the LLC.

Once the state requirements are understood, the next step is to decide on a name for the LLC. The name should be unique and not already used by another business in the same state.

You should search the state’s business registry website to ensure that the desired name is available. After choosing a name for the LLC, the next step is to file the necessary paperwork with the state.

The paperwork typically includes Articles of Organization, which provide the state with basic information about the LLC, such as the name and address of the company, the name and address of the registered agent, and the names and addresses of the members.

Form Your Multi-State LLC Seamlessly With doola

To simplify starting your business, use doola – a comprehensive platform and resource centre for small business owners. With doola, you can form your LLC in any state from the convenience of your laptop. You can also access small business banking, bookkeeping tools, and more!

FAQs