From a business standpoint how are most of you approaching the concept of buying and selling land across multiple states? When starting out are you operating in your name or as an LLC? My understanding is that with an LLC must be in the state you are investing or regisgtered as a foreign entity so that you are covered for those states tax purposes. What hurdles exist as a person doing so in your own name?
What are you finding to be the best way to approach all this?
Itās a good question @GarrettM. I used to obsess over this stuff, always wanting to do everything right and not make a misstep. If you want to see the technical answer (Iām not an attorney, but you can see what a couple of attorneys said when I asked them about this), you can check out this blog post:
If you fail to register as a foreign entity in a state where registration is required, while you are technically violating that stateās business laws, the most common consequence is that you cannot file a lawsuit in that state until you register and pay any required fees and penalties, and you may also face fines or other civil penalties.
That said, read the blog post above. āDoing businessā can be interpreted differently depending on the situation (itās not a black-and-white thing).
When Iām doing a one-off deal in another state, I donāt jump through mnay hoops or register anythingā¦ but if I know itās my plan to work in a state long-term, thatās when Iāll be looking at registered a new LLC or doing whatever I have to do to make my LLC legit in that state (or, I could just buy it in my personal name or in my self-directed Roth IRA and skip the whole LLC registration thing altogether).
Thanks for the response Seth, that blog post is exactly what Iām looking for.
You can buy and sell property out of state, but most states consider this ādoing business,ā so your LLC or business entity usually needs to be registered there to stay compliant and protect liability. Many investors create a local LLC in each state to hold property, which simplifies taxes and contracts, while others operate through a foreign entity registration. Even if it feels like a one-off deal, checking local rules first can save fines or title headaches down the line.