Tax implications of moving LLC to another state

[wizash2]

Hi Gurus:

I work as a software consultant and currently I am in MA but there are high chances that I will relocate to VA.
I want to setup a LLC for my business but wondering if I should wait untill decided for VA state or incorporate in MA right away
Merging ,dissolving cost is not a big concern but is it too much hassle or are there nay tax implications becasue of 2 states?
Starting it right away gives me the benefit of getting some other contracts. Can I incorporate directly in VA instead ,will it be another tax hassle?

I want tp setup LLC with S corp.

Appreciate your reposne!
Akhil

[Business Attorney]

You have several choices and none of them should be too big of a hassle:

1. Form a MA LLC and when you move to VA simply qualify it to do business in VA. The downside is that every year you will need to file two annual reports (MA and VA).
2. Form a VA LLC and qualify it to do business in MA. As soon as you leave MA, simply withdraw your qualification in that state.
3. Form a MA LLC and when you move to VA, merge it into a newly formed VA LLC which will have the net effect of simply changing the state of formation.

There are no Federal tax consequences to any of the 3 choices. The first and second choices may have same state income tax consequences based on the particular states' rules for apportionment of income, though I suspect the impact, if any, would be minor.