Do I need to register my NJ LLC as a foreign LLC?
Answered by:
ContractsCounsel verified
Do I need to register my NJ LLC as a foreign LLC?
I'm working remote from NY and my client is in NJ.
Would it make more sense if I formed my LLC in NY instead and register as a foreign LLC in NJ?
Hello! My name is Dolan and thank you so much for contacting me! I just had a few quick questions for you: What is the nature of the work you do for the client? Do you work full time in NY?
Hi Dolan, Thanks for the quick response. I work as an IT consultant providing software support for healthcare organizations. I will mostly be working remote from my home in NY for this specific client in NJ. I might go on site if requested but not likely.
No problem! Understood! So you're just wondering what you need to do here, correct?
Yes.
Ok! I just need a little time to draft up a high-quality answer. I'll be with you as soon as possible. It won't be terribly long.
I'm so sorry about this situation! I want to address your situation with a detailed response, so if you have any questions, don’t hesitate to ask because this law stuff can get complicated. Yes, you will need to register in NY. The main reason is that you have a nexus with NY. A nexus means that you are performing all of your functions (or at leat a majority of them) in NY. Even if it is for clients out of state, because you are enjoying the benefits of being an NY resident, and have to file NY taxes because of your residency, you'd need a foreign LLC. You can start here - https://dos.ny.gov/application-authority-foreign-limited-liability-companies
No worries. Would it make more sense if I formed my LLC in NY instead and register as a foreign LLC in NJ? This other question might be for my accountant. Do you know if I need to pay taxes for both states or just the state where I'm doing work from (my home in NY in this case)?
In my experience, if you are working primarily out of NY, even if you have out of state clients, I'd register in NY with your LLC. It'll be less paperwork for you. In your case, you would only pay taxes in the state you actually perform the work, so in this case, and from my understanding, just NY.
Great. Thanks for all your help Dolan. I'll definitely reach back out if I have any other questions.
Hi Dolan, do I have a nexus with NJ if I never physically went there for work? This will be all remote work from NY which is where I formed the LLC. It looks like I need to register as a foreign LLC for NJ which I will take care of. If I elect S Corp tax status, do I need to apply for that for NJ also? I could be wrong but it looks like they require it at least for domestic NJ LLC. Thanks
Also, should I be getting liability insurance (general, professional, workers Comp) for NY since that's where my LLC was formed and where I'm working from?
Hello *****! 1. If you never physically went there, it is improbable that you would have a nexus there. Your nexus is going to be in NY in this case since that is where you do your work. Registering in NJ wouldn't make sense if you have a client there, but you aren't actually operating there, don't have a physical space there, do not have board meetings or employees there, don't pay income taxes there (presumably), and otherwise only have a client there, which is not an owner or operator of your business; 2. Liability insurance will cover you no matter the state. Most insurance carriers cover all 50 states regardless of geographic location.
Thanks for the quick reply. So I don't need to register as a foreign LLC for NJ even though I'm doing business with a client there? In the off chance they do ask me to come into the client location in NJ, then I would need to register as a foreign LLC?
Does the same apply with LLC with S Corp tax election? No foreign LLC needed if I didn't do anything physically within that state?
1. Correct - you do not need to register as a foreign LLC. 2. Just going there occasionally doesn't create a nexus. You have to be doing business there and this typically means doing business regularly on a day to day basis in that state. You can certainly register as a foreign LLC if you are concerned, but it's just not required; 3. Your S-Corp election itself is separate and irrespective of the foreign LLC/nexus requirement. So you wouldn't need to applyfor anything related to that reason.
Just want to make sure that if I do go with an S Corp election that the same applies. I don't know if they treat it differently than an LLC without that election and if I need to register as an S Corp for that state if I do go that route. Looking into whether it's worth it for that election and will be speaking with an accountant to do the calculations.
For sure - the S-Corp election would not be relevant to the foreign LLC issue. You can seek S-Corp election no matter where the company is registered. The S-corp election is just for tax purposes is all and you won't be treated differently than any other LLC regardless of where you do business or where it's registered. In my experience, S-Corp election is a very good idea as it saves you on taxes. It's a tax-related question and I'm not a CPA, but in my experience, getting S-Corp election allows you to write off things like your salary to yourself and just pay less in self employment taxes!
I just spoke with an accountant and confirmed S Corp will have more tax savings. I already formed my LLC. He said that I can't just submit form 2553 to elect S Corp tax status. I need to change it to a corporation before I can elect that status. Do you know what is the correct process to do this?
You may need to verify with the accountant, but you would use form 8332 to classify yourself as a corporation, then do form 2553.
Thanks Dolan. I will reach out to confirm in that case.
- Business law questions
- ¿Qué hago ante esta citación legal en Baton Rouge?
- What is a reasonable salary for a single-member LLC owner filing as an S-corp in data analytics?
- Is a Dry-Hire mobile bartending service legal in WI?
- how to get EIN i fillout SS4 Form through efile
- How to structure payroll between a Texas PLLC and a California PC for legal and tax compliance.
- LLC law questions
- Forming Ohio (single member) LLC for property investment - out-of-state investor. What address do I use if for the LLC?
- Can my LLC purchase a car?
- Can an LLC buy a business?
- What is needed to keep my LLC in good standing?
Disclaimer : The content and discussions on this platform are for informational purposes only and do not constitute legal advice or create an attorney-client relationship. Participation, including submitting questions or reading responses, does not establish an attorney-client relationship, and communications are not protected by attorney-client privilege. Use of this platform is at your own risk, and neither the operators nor contributors are liable for any outcomes resulting from reliance on the provided information. Users should avoid sharing sensitive personal information, as while efforts are made to redact such details, submissions remain the user’s responsibility. By submitting content, you grant us the right to edit, publish, and display it in accordance with our Terms of Use. Legal information provided may not apply in all jurisdictions, and laws may vary or change over time; consult a licensed attorney for advice specific to your situation.
How Expert Legal Chat works:
Dolan W.
You need a lawyer who's more than just knowledgeable – you need someone who's on your side. That's where I come in. I'll be there every step of the way, offering clear communication and proactive solutions. Whether you're starting a business or navigating a complex legal matter, I'll help you make informed decisions and achieve your goals. I also have drafted many templates to save you money. Just use this link - https://www.contractscounsel.com/client/lawyer-profile/3764#Templates Why Choose Me? I put you first I'm proactive I'm efficient I'm accessible