Business Viability

[MattLasko]

Hi - I’m starting a business. The business takes 20 people and finds housing for them at 4 different locations, each in a different state, for 3 months each. At each location, I will receive an ‘occupancy agreement’ for all 20 individuals, and I have the following questions:

1. What type of agreement would I have my clients sign?
2. Will I pay tax in only the state where I have my LLC or in every state where our clients stay?
3. If my business model has 2 sources of revenue - Rental payments directly from our clients and also one-time cash payment from their employer. Is there a way to structure the contract with their employer, so that the employer does not have to deal with 4 different states from tax-residency standpoint?

 

[quincy]

Hi - I’m starting a business. The business takes 20 people and finds housing for them at 4 different locations, each in a different state, for 3 months each. At each location, I will receive an ‘occupancy agreement’ for all 20 individuals, and I have the following questions:

1. What type of agreement would I have my clients sign?
2. Will I pay tax in only the state where I have my LLC or in every state where our clients stay?
3. If my business model has 2 sources of revenue - Rental payments directly from our clients and also one-time cash payment from their employer. Is there a way to structure the contract with their employer, so that the employer does not have to deal with 4 different states from tax-residency standpoint?

What states are you considering and what is the name of your state?

When starting any new business, it is smart to have local professionals involved who can advise and direct you.

 

[Zigner]

What class is this homework problem for?

 

[MattLasko]

Wow @quincy - Crazy fast reply.

I am considering of incorporating in Wyomying. The states I am considering rent out of are Colorado, Tennesse, Arizona, and Florida. However, this could change, and as the business matures, the properties will be in more states.

My clients would only sign one agreement for all 4 locations, so i'd like to do this at the centralized/national level rather than at a local level.

 

[Zigner]

My clients would only sign one agreement for all 4 locations, so i'd like to do this at the centralized/national level rather than at a local level.

Since each state has different tenancy laws, it might be wise to reconsider that.

 

[quincy]

Wow @quincy - Crazy fast reply.

I am considering of incorporating in Wyomying. The states I am considering rent out of are Colorado, Tennesse, Arizona, and Florida. However, this could change, and as the business matures, the properties will be in more states.

My clients would only sign one agreement for all 4 locations, so i'd like to do this at the centralized/national level rather than at a local level.

If you want a single agreement that can be used in all of the states you mention (and eventually others), you will need to learn about the rental laws in all of the states and provide information on each state in all agreements. The laws in each state can vary substantially.

Taxes are only one consideration, in other words. Your agreement will need to address various and assorted tenant rights and eviction laws, for example.

I am not sure for what purpose you intend to provide housing for three months only but, if these are “rotating” rentals, your plan will need to address what happens if/when one tenant refuses to move out to allow for another tenant to move in.

I think that you need more help on drafting a rental agreement than a forum can provide, especially since no one here can actually assist with the drafting of any agreement without violating the rules of this forum and, for at least some of the forum members, without violating state ethical and professional rules.

Can what you wish to accomplish be accomplished? Sure. A single carefully drafted agreement could cover all that you want covered. But having separate rental agreements for each state could be easier.

 

[Taxing Matters]

1. Will I pay tax in only the state where I have my LLC or in every state where our clients stay?
2. If my business model has 2 sources of revenue - Rental payments directly from our clients and also one-time cash payment from their employer. Is there a way to structure the contract with their employer, so that the employer does not have to deal with 4 different states from tax-residency standpoint?

It's going to depend on the exact states involved and what taxes they levy. However, as a general matter, you're likely to have to pay taxes in every state in which you provide those rentals. You'd want to consult a tax professional to structure this in the most tax efficient way possible, but avoiding tax in all those other states completely is probably unrealistic.

 

[quincy]

What seems apparent is that personal professional assistance will be necessary.