After quitting my job I did some consulting (writing code for Engineering companies) under my own name.
I was living in New Hampshire at the time. Eventually I formed a LLC in NH for the purpose of selling software I was developing, unrelated to the previous consulting jobs. Soon after formation I moved to Massachusetts. I did more consulting under my own name for local clients. In order to do business in Massachusetts with the LLC from NH I would have to jump through hoops and pay money, not to mention the confusing (for me) tax situation. So I kept the consulting under my name but used the company name to represent the software I was working on. I don't yet have any sales of that software so I didn't have to pay any taxes and just put the LLC as a disregarded entity when filing taxes, even though I do have a taxpayer ID for it.
Moving forward, I am not sure if selling the software will ever happen. I'd like to do business in Massachusetts as a more formal entity. I'm thinking maybe I should consolidate the software I am trying to sell and any consulting based on that platform with the consulting on unrelated issues. Not sure if there are any IP issues if I write software owned by customers and software owned by me under the same business entity.
I don't want to have to worry about paying / filing for income taxes in both NH and MA.
What's the best way to do business of software consulting and software sales in Massachusetts:
-Get permission to do business in MA with my NH LLC and do consulting under that entity as well as potentially sell the software I am developing and associated services.
-Start an new LLC (or maybe Corp) in MA and roll everything, sales and consulting, under that.
-Keep things the way they are, that is, attempt to market the software and associated services under the NH LLC, and consult on unrelated topics under my own name.
-Start yet an other LLC (or Corp) in MA just for consulting without any IP on the stuff I make, and keep the NH LLC for software sales.
2 Answers from Attorneys
Before worrying about the structuring, the priority should be to analyze the IP rights to be sure that you know what they are.
Without sound reasons for having any juridical entity (e.g., you need limitation of liability for acts of employees), we advise against using them, as the expense and complexity outweigh the benefits.
I would form a MA LLC for your consulting business in MA. As for the software and the NH LLC holding the Software, you can either dissolve it and move the software IP rights into the MA LLC or keep it as a IP LLC and use it to sell or license the LLC.
I create LLC's for consultants like yours all the time. Please feel free to call me without obligation to further discuss your options.
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