CA is pretty expensive I believe with the licenses - and you should get a license where you are located, not where your servers are - i mean later on you could go for something national but for now You'd have to do something where you're residing because that's the taxes you have to pay.
As for CA or WA, I can't advise which one is better or which one would be cheaper, you should consult a lawyer or accountant about that and see which one would be a smarter choice. I live in NY so I don't know too much about the business laws in the west coast.
Consult an accountant. An accountant can help you with which state it is best to form the multi-member LLC in. After that, contact a lawyer, or go to some site that allows you to generate and download a partnership agreement. The partnership agreement is what is going to allow and contract all of you for equal ownership provisions, death rights, etc. The LLC formation is just for taxation purposes and licensing. You'll also want to register for an EIN at the federal level to pay your taxes at that level. Good luck to you.
CA is expensive on the LLC franchise tax, for sure, but they'll also probably require you to register in the state if you have a physical presence (office w/ any staff). We had a non-resident partner (a guy working from Colorado and later the UK) in our company history and they had to deal with California looking for its cut of their income. It was also a bit of extra paperwork. I'd definitely get professional advice to be sure.
Needless to say, I'm glad our partners these days are all California residents.
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For most LLCs, you will need to also register in the home state of the business. So unless there is a DISTINCT advantage to registering in a state other than the home state, you should register in the home state to avoid paying the LLC fee twice. For example, even if you register your company outside of CA, if you have a presence in CA, you will have to pay the fees in the registered state AS WELL AS all of CA fees.
But again, consulting an accountant is always the best option in these matters.
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The previous poster is mostly right, your going to need to register twice in many situations when you have an "out-of-state" entity. I can tell you Washington is more attractive from a corporate tax situation. The LLC/LLP structure is a little different, but you need to talk to someone that understands this in order to make a decision factoring in all aspects.
There are advantages and disadvantages of both jurisdictions and other jurisdictions.
You need to consult an accountant or a lawyer regarding this though. Setting up a partnership between two people, regardless of the legal structure, is complex and you need someone that can draft an agreement between the partners. Spending a few bucks now will save you alot in the long run. Disputes and disagreements destroy businesses and generally only benefit the lawyers financially.
Consult someone that knows what they are doing though. An LLC/LLP means nothing if the proper documentation and agreements aren't behind it.
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