I recently submitted paperwork to form a LLC in California. About a week after submitting my paper work, I came across this post:
http://answers.google.com/answers/threadview/id/107228.html One of the repliers to the post, taxmama-ga , suggested the following:
"You could form two LLCs or S-Corps in Nevada. Set up a general partnership (GP) in California
(no minimum fees). Make the partners be the two LLCs or S-Corps (since a partnership must include two or more entities). Run the whole business through the California GP. You will have no State of California taxes."
Has anyone heard of something like this? Should I instead look to do something like this in the future?
Sounds kinda shady, and California has been very aggressive in collecting taxes in the last couple of years.
I would look for a CPA that is willing to take on the risk of running the scheme. But in reality I would avoid it altogether. Why not set your structure up in a straightforward, non-sneaky-looking way and then pay a good CPA to do their magic to minimize the taxes you will have to pay?
If it is legal and it is done to avoid taxation, etc. you can bet that they will change the laws to disallow what they see as subversion/avoidance.
Do what is easiest for you to manage.
It is unfortunate that so many states see socialism as the answer...
This issue comes up so frequently that I posted "Why (not) form an LLC in Nevada ".
I see that you are here in the Bay Area. Assuming that this is where you will operate the business, you did the right thing to form a California LLC.
Disclaimer: This post does not constitute legal advice and does not establish an attorney-client relationship.