I have a sole-member LLC registered in Wyoming and my company is 100% virtual. I live in New York but my business offers services across the nation. I'm the only working member of the company. Do I need to register my company in NY as a foreign entity? if I use a VPN to connect to a server in Wyoming to conduct online activity, do I still need to register as a foreign entity in NY? most importantly, do I need to register my company in every state where I get new client even if I don't have any physical presence?
2 Answers from Attorneys
That's a good question and the general rule is if you're doing business in a state you have to register and pay tax on income earned in that state. Yes, one of the drawbacks of using an out of state LLC is that it makes you a foreign company in New York even though you live here. If you've elected to be taxed as a disregarded entity for federal purposes, that may make a difference.
You would not need to qualify in NY unless you have created a nexus there, which is usually something systematic and considtent like offices, showrooms, workers, etc.
It usually makes sense to domicile an entity where you are operating it, but in some cases there is a lot of latitude. If, for example, you acquired a virtual office address in WY then to the world would be in WY. This might be an issue of course if someone sued you in WY, which is where they would, and you have to deal with that from NY.
If you need help or clarification, feel free to contact me anytime that is convenient.
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