LLC partnership living in one state, doing business in another

mail6 · ‎June 5, 2019

We have a two person partnership LLC doing business in CT but we just moved to MD. Our business address is now MD but we still make all our sales in CT and do no business in MD. Do we need to allocate our income between CT and MD even though we do no business in MD?

Rick19744 · ‎June 5, 2019

You have a number of things going on:

I am assuming since this started in CT, the LLC was organized under CT state law.
If 1 is correct, you may continue to have filing requirements with the CT secretary of state. I have not looked into this filing requirement; some states have annual filings and others every other year. You will need to follow-up on this matter.
Based on your facts, I am assuming that both member's are now living in MD.
If 3 is correct, you now have multiple state filing requirements.
Since CT is your state of organization and where the business activity takes place, you will continue to file a CT-1065. If number 3 is correct, you will also need to look into whether or not CT has nonresident withholding requirements.
Since you now have a business location in MD, you will need to file a form 510.
If number 3 is correct, the member's will also be required to file two state tax returns. The exact type for 2018 is dependent on when the move took place.
You have a mildly complicated situation, so depending on your tolerance for figuring out the multiple filing requirements at both the entity and individual level, you may want to consult with a tax professional.
In answering your specific question, yes you need to allocate the income based on the sales activity.
I have attached a couple of links that may help you get started down the right path

https://taxes.marylandtaxes.gov/Business_Taxes/Business_Tax_Types/Income_Tax/Filing_Information/Pass...

https://portal.ct.gov/DRS/Nexus/PartnershipLimited-Liability-Company---Nexus

*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.

View solution in original post

Rick19744 · ‎June 5, 2019

You have a number of things going on:

I am assuming since this started in CT, the LLC was organized under CT state law.
If 1 is correct, you may continue to have filing requirements with the CT secretary of state. I have not looked into this filing requirement; some states have annual filings and others every other year. You will need to follow-up on this matter.
Based on your facts, I am assuming that both member's are now living in MD.
If 3 is correct, you now have multiple state filing requirements.
Since CT is your state of organization and where the business activity takes place, you will continue to file a CT-1065. If number 3 is correct, you will also need to look into whether or not CT has nonresident withholding requirements.
Since you now have a business location in MD, you will need to file a form 510.
If number 3 is correct, the member's will also be required to file two state tax returns. The exact type for 2018 is dependent on when the move took place.
You have a mildly complicated situation, so depending on your tolerance for figuring out the multiple filing requirements at both the entity and individual level, you may want to consult with a tax professional.
In answering your specific question, yes you need to allocate the income based on the sales activity.
I have attached a couple of links that may help you get started down the right path