I'm not sure this is the correct forum so forgive me if it isn't.

We are starting a business with a partner which is licensed in the states of Oregon and Washington. We are currently domiciled in Montana but only maintain an address for drivers licenses, etc.

My partner has formed an LLC (I assume this is the right name) separate from the business to further protect them. My question is, should we do the same and if so, should we do it in Montana or elsewhere? I wouldn't have a problem changing domicile states if there is one better suited to our needs. Any suggestions?

Yes...my suggestion is that you consult an attorney and CPA in the appropriate state that the business is in. You need to protect yourself if you are a partner in a business.

Yes, I would encourage you to see a lawyer in the relevant state or the lawyer handling your other business affairs. Besides using a separate legal entity as the way to make your investment in the venture, there also is the issue of the legal entity used for the business itself. I assume you are not planning on doing a true legal partnership, but rather forming another LLC or an LLP that would actually own the business. And all this drives possible tax issues too of course.

Keep in mind that the domicile of the owner of the LLC and the domicile of the LLC are not necessarily the same. You can be a Texas resident that forms or buys an LLC in Nevada and that LLC forms or buys another LLC that starts a business in Washington. If operated properly, each LLC is truly its own legal entity. That is what gets you the potential for limiting your risk. It is obviously not a substitute for insurance though. The tax issues too must be considered.

Also, with joint ownership of a closely held venture there are a lot of other issues that may be addressed in an operating agreement among the owners of the LLC or partnership. How decisions are made, exit strategies, death of a partner and things like that. A good CPA or attorney with experience with small closely held businesses can help a great deal on that.

Good luck.

Ok, some things have just changed. My sister (partner) has dropped out of the business because they are moving to Hawaii for her husbands work. That leaves just my husband and myself. The business is licensed in wa/or and we are domiciled in mt. We will be getting professional advice but until that time, does anyone have any thoughts on this?

Do you need to hire a bookkeeper right now or can we just do it at tax time? If so, does anyone know what can be claimed so we know what receipts to keep, etc.? Thanks for any and all advice.

I would never wait until year end to start my books. What a nightmare that would be.

The best bang for the buck would be Quicken. A somewhat simple bookkeeping software that the files you create can be easy transfered to a CPA/bookkeeper at years end. Log your credits/debits into the books as they occur each day.

Another good software for guesstamating taxes is Turbo Tax. This will allow you project tax savings ideas before they occur.

Both are a good place to learn the basics but they do NOT replace professionals in there respective fields.

I agree with T Bone that as soon as you get the business you should be tracking the performance of the business through at least Quicken or something. (Actually you should possibly be following all this before the purchase as part of your due diligence of the business.) But this also is very dependent on what is being purchased and how.

The impression is that this transaction is the purchase of an ongoing business. From a legal standpoint, the business could be bought as either shares of the existing corporation or LLC or as assets alone. I doubt it is presently a sole proprietorship. If it is an asset deal, you will need to set up an entity to buy the assets. You may also want to set up an entity to buy the shares of the existing business entity as well if that route is chosen. In either case there are issues and things to decided, but your being from Montana and the business being in another state is pretty minor. A tax person will look at it one way and a lawyer perhaps another.

You also haven't discussed (nor perhaps should you here) the magnitude of the investment. That would certainly impact the amount of due diligence that is needed for the transaction. It sounds like you should be chatting now or soon with a business lawyer or accountant about some of these risks and activities if you are ready to start moving in earnest with the acquisition. There could be minor items such as outstanding accounts payable or disputed receivables that are found in the diligence phase or there could be major hidden things like a contract with a key supplier that can't be transferred and the supplier wants out of the relationship to boot. This then ties into the representations and warranties that you may want to get from your Seller and the level of risk you want to take based on the size of the investment both in a "hard dollar" perspective and also when viewed from the standpoint of the amount of your own net worth being invested in the business.

Good Luck. PM me if you wish, but as you indicate, you will be getting some professional advice as you move through the transaction.