I currently live in Buffalo, NY and I am buying a Westerly Konsort located in Florida. I plan to keep it in a marina in the Cape Coral Florida area to teach ASA sailing courses during the winter months (I need an excuse to get out of Buffalo during the winter lol). I have two questions that I would love any and all opinions from this group - first, since I will be teaching on this boat I have been advised to form an LLC to give me some liability protection. Which state should I incorporate the LLC in? Florida or New York? Next question, which state should I register it in? At least for the next 5 years or so my residence will be in New York but the boat will live in Florida. Maybe I should just have the boat documented with the USCG? I would love to hear your thoughts. Thanks, Tim
Where to register my boat
- Thread starter timover5969
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Regarding LLC... it does not matter. Delaware has some of the least expensive LLC processes and as such... a great many companies are registered there. Same is true of Nevada.
I guess I would make the decision based on a combo of ease and expense and find your sweet spot.
I guess I would make the decision based on a combo of ease and expense and find your sweet spot.
Frankly, the last place I’d go for legal advice from strangers is a sailing internet site. The best you could hope for here is uninformed opinion.
The Florida Tax Collector which is the entity which enforces Floria boat registration has a user-friendly web site you need to consult.
The Florida Tax Collector which is the entity which enforces Floria boat registration has a user-friendly web site you need to consult.
@ Rick Webb
I've been thinking on this one a lot. I presently work in S.C. but have family and property in VA. The boat is on its trailer here in SC but... I will probably do a week or more each summer (ON THE BOAT-24/7) in VA. As far as total hours of sailing, I expect I will spend more time on the boat in VA. But the boat will physically spend more time in SC. It would not be such a quandry except SC has really high taxes on boats and I have another year left on my boat registration in VA.
FYI I know nothing of your or the boats situation but for the sake of clarification for others if you are taking money for people to go out on your boat you must have a Captains license. Many try to obfuscate the issue and get BIG fines
Okay that is good advice but Rick did give the correct answer. The quandry is defining principle use.
I have a 25 ton master captain license with sailing and towing endorsements. I probably should have noted that in my original post. I am also an ASA certified instructor for ASA 101, 103, 104, 105, 106 and 114 certifications. However, this will be the first time teaching on a boat I own as opposed to a boat owned by a sailing school.
I'm thinking I'll probably just document the boat with the USCG with the LLC as the owner. I think that may solve the whole "where to register it" question. I'm new to this owning a boat for commercial use thing - does anybody see a problem with just having the boat documented?
Okay that is good advice but Rick did give the correct answer. The quandry is defining principle use.
Good point - I am mostly looking for advice with experience behind it but I should enlist the help of a professional. I already consulted with my accountant and he advised me to set up a single member LLC but he knew nothing about the pros and cons of where to register it and/or have it documented.
The question regarding where to set up your LLC is quite apart from where to register your boat. If you set up your LLC in a state other than where you operate, you will have to file taxes in the state you operate and probably file an annual return in the state where you formed your LLC. Are you trying to make money on this business? Is the boat going to be owned in your name or owned by the LLC? Seek professional advise before making any decision on where to incorporate, the actual liability protection afforded, and the tax ramifications.
If you "document" your boat with the Federal Government, you don't pay any specific property taxes on the boat (just an annual renewal fee) BUT you will probably have to pay property taxes or some other tax somewhere, whether it is in NY or Florida will probably be determined by where the boat is located most of the time. The state rules will determine where you have to pay taxes on the boat. I'm not a tax attoney but I did "stay in a Holiday Inn last night."
If you "document" your boat with the Federal Government, you don't pay any specific property taxes on the boat (just an annual renewal fee) BUT you will probably have to pay property taxes or some other tax somewhere, whether it is in NY or Florida will probably be determined by where the boat is located most of the time. The state rules will determine where you have to pay taxes on the boat. I'm not a tax attoney but I did "stay in a Holiday Inn last night."
Haha, love the Holiday Inn quote. I contacted my accountant and he advised me that if I set up a single member LLC then it didn't matter where I incorporated for tax purposes because the profit/loss would simply pass through to my own tax return which would be filed in my home state of New York. I do plan on making a profit, but not a large one. The reason I was soliciting advice on where to incorporate was to determine if it would affect where I should register the boat in any way. I suppose if I have it documented that is a irrelevant question. There is also a possibility that I sell my NY based insurance business in 5 years or so and relocate to Florida to become a full time captain and instructor - maybe that would affect where to incorporate? That question is most likely beyond the ability of anyone in this group to advise on so I probably should contact a professional that bis familiar with these things.
As far as the LLC you need a tax advisor. If the boat is to be kept in Florida longer than the grace period of 90 days, it must be registered in Florida.
I don’t believe Floria cares with who owns it or the entity which owns it or where the owner is but again, only Florida can tell you definitively.
I'm not going go chasing for the info, but IIRC, you can/must document as a homan being- no "groups allowed?
Pretty much every boat I have charted or taught on are owned by an LLC and the vast majority of those are documented. In the eyes of the tax man, any corporation is considered "a person".
@ Rick Webb
I've been thinking on this one a lot. I presently work in S.C. but have family and property in VA. The boat is on its trailer here in SC but... I will probably do a week or more each summer (ON THE BOAT-24/7) in VA. As far as total hours of sailing, I expect I will spend more time on the boat in VA. But the boat will physically spend more time in SC. It would not be such a quandry except SC has really high taxes on boats and I have another year left on my boat registration in VA.
Not sure time on the trailer counts
It's going to be up to the guy thinking about writing the citation
If you can show a VA Drivers License with a VA address I imagine your OK I'd not readily volunteer working in SC
On the second or especially third contact I think you'd be hosed for sure.
Few guys have a hard on for that sort of thing until you're drunk or give them some lip then it is whatever he can think of to cite you for.
I had a run in with a State Trooper south of Austin who wrote me up for tags, license and insurance on a '65 Mustang Fastback. All mine were current in Hawaii at the time. The Mustang stood out and Hawaii plates anywhere east of the California coast do as well. I had seen him looking at my car before so he recognized me as we passed each other. The DPS guys are usually very polite and professional until they need to be less than polite but are still always professional. This guy was an ass clown from the get go, not sure if had an issue with Hawaii, Mustangs or maybe it was just me. I tried to explain to him as a full time student I did not have to get Texas tags etc.. He actually said to me I only write them I let the judge figure them out. The next day I took my citations to the JP in Kyle really nice lady dismissed them and said she'd be having a conversation with the trooper.
Be clear with your attorney and insurance company about this. Generally an LLC or corporation will not protect you from your own personal errors. In other words, if you are personally negligent, the entity is, in most cases, not going to protect you and your personal assets.
A corporation or LLC in almost any state is going to cost both up front and ongoing fees and expenses. Research with your accountant and attorney what the best venue is and how much it is going to cost on an ongoing baisis and think about if that money might be better spent on additional liability insurance. If you are serious about an entity, this is not something you want to set up and maintain using a self help process.
And in most cases, regardless of federal documentation, the boat is going to be property taxed where it spends most of its time.
I agree with Don's statement above. "Frankly, the last place I’d go for legal advice from strangers is a sailing internet site."
Prepare to jibe.
Certainly a boat owned by an entity can be federally documented. There are requirements though that the entity has to be owned at least 50% by a US citizen, in some cases 75%.
Not really true. A corporation is taxed as a corporation. A whole different tax structure. Unless of course it elects to be taxed as a subchapter S corporation where the corporate income and loss generally flows out to the shareholders. A corporation still has to file separate federal and state income tax returns. More annual costs.
An LLC is not a corporation.