How does my LLC's address affect my tax requirement if I am planning to do pass-through taxation? 1 Answers as of April 27, 2011

My roommate and I are planning to register an LLC (a web startup) in Pennsylvania. We live in Philadelphia and work from home. We were told that if we register the LLC at my roommate's parents' house in the suburbs, we can avoid paying the higher city taxes.

Two questions:

1. Will this work if we are planning to use pass-through taxation for our LLC? We will be filing our personal taxes in Philadelphia. As I understand it, pass-through means that the LLC is ignored for tax purposes, so it's address shouldn't matter. Is that correct?

2. Is this something we could get in trouble for? I am not completely clear on how "place of business" is determined. Our business is completely online so we do not really have a location.

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Steven J. Fromm
Steven J. Fromm | Steven J. Fromm & Associates, P.C.
There is a difference between tax avoidance and tax evasion. The former is legal and can be accomplished through legitimate tax planning. However, working in Philly but saying you live elsewhere is tax evasion and could create tax and legal problems for you and the LLC down the road. You need to register the LLC with Philadelphia and file and pay BPT and registration fees, etc.
Answer Applies to: Pennsylvania
Replied: 4/27/2011
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