My questions are: was it a mistake to register the second LLC in IL rather than VT where there's no income tax? ===========as you cn see, most states tax at least some types of business income derived from the state. As a rule, the details of how income from a specific business is taxed depend in part on the business?s legal form. By default, LLCs, I mean mmllc, not smllc, themselves do not pay federal income taxes, only their members do. VT, however, imposes a business entity tax of $250 on LLCs. When it comes to income taxes, most LLCs are so-called pass-through tax entities. In other words, the responsibility for paying federal income taxes passes through the LLC itself and falls on the individual LLC members. By default, LLCs themselves do not pay federal income taxes, only their members do.
Il, however, imposes a separate state tax of a personal property replacement tax directly on LLCs. For typical LLCs , I mean those not electing to be taxed as corporations, the tax is 1.5% of net income.
Note: unless your llc is an smllc, then, LLC which has more than one member typically pays income tax as a partnership. The partnership/llc itself does not pay taxes directly to the IRS; the individual partners/members pay tax based on their share of ownership in the partnership/llc.The partnership/llc files an information return with the IRS on Form 1065. Then a Sch K-1of 1065 is prepared for each partner, showing the share of the profit/loss of the partnership/llc. The K-1 is filed with the partner's/llc member?s individual return and the gain/loss is shown on the partner's Form 1040.
Should I reregister both LLC's in VT or does it matter?==========I guess you need to check advantages/disadvantages in registering in vt/il as you prepare to register your LLC, you've probably heard that the state where you file the paperwork makes a difference. Some states offer LLCs more financial advantages than others, and that means you should carefully weigh your options before filing . in generl,many people form LLCs in their home state because it's the most obvious choice, or they didn't know they had a choice. Filing in your home state can be a good option for many entrepreneurs, particularly those who have a home, physical office or store, and conduct the vast majority or all of their business in their home state. If your business meets all of these criteria, you may have no other choice but to file in your home state. Moreover, filing in your home state could save you money on fees at the outset as well as annually,an LLC does not have to register as a ?foreign LLC? if it conducts business in that state. Note, though, that ?doing business? generally requires an active business presence if not a physical office. Also, an LLC that does business in its state of filing does not need to find and pay a registered agent to represent its interests within that state.However, it's important to consider the fees and state income taxes your business may be required to pay if you file in your home state. For that reason, if your business has no physical facility or storefront?a consulting business, for example?or if you plan on conducting the majority of your business out of state, you should consider starting an LLC in a state other than your home state
lease contact a tax pro , an IRS Enrolled Agent/a CPA for more info in detail.
What else should I know before things get further along?==============as mentioned previously; there are many factors to consider when deciding where to form/register your LLC, but doing your homework up front can save you a lot of headaches