I've heard conflicting advice about this. Wouldn't having multiple LLCs mean multiple annual fees, multiple tax filings, etc? Is it really worth the hassle just to separate different types of business activities?

It does mean additional annual fees and separate tax filings, but those costs need to be weighed against your risk exposure. For lending activities specifically, the risks can be significant. If a loan goes bad and there's litigation, having that activity in a separate LLC helps shield your other assets and business ventures. The administrative overhead is something to consider, but most accounting software makes it fairly manageable to maintain separate books. Many states have reasonable annual LLC fees (though some like California are expensive). I've found the peace of mind worth the extra few hundred dollars annually. It's especially important if one activity is high-risk (like lending) while the other is relatively safe.

Texas is indeed pretty business-friendly. I changed my LLC from retail to consulting last year. You don't need to file any amendment with the Secretary of State unless you're changing the actual name of your LLC. The business purpose statement on Texas LLC forms is usually broad enough to cover almost any legal business activity.

Thanks for the info! That's a relief to hear. Did you have to update anything with the Comptroller's office for franchise tax purposes? I'm wondering if changing activities might affect how I file those reports.

Does this change if it's a sole proprietorship though? Since the business income passes through to the business owner's personal return anyway? I'm confused about how this works since technically the money would be taxed on someone's personal return either way.

Great question about sole proprietorships. You're right that the income ultimately flows to someone's personal return, but it matters WHO reports it. The income should flow through the Schedule C of the actual business owner (father-in-law), not OP. Even though it's all "personal income" eventually, the proper reporting chain matters. If reported incorrectly as OP's income, they're being taxed on money they never received or controlled. Plus, the father-in-law's business isn't showing its true income, which creates problems for both parties. The key is getting the income attributed to the correct taxpayer, even if both are individuals in the eyes of the IRS.

The Taxpayer Advocate Service can be amazing but they're extremely backlogged right now. I applied for help in January and didn't hear back until April. They're prioritizing cases with immediate hardship (like impending house foreclosure or can't afford medications). Based on what OP described, they might qualify if the tax bill is causing severe financial hardship, but I'd pursue multiple paths simultaneously rather than waiting on TAS.

Do these mail forwarding services actually hold up if you get audited? I'm worried about setting something up that looks fishy to tax authorities.

Mail forwarding services are completely legal and legitimate for business addresses when properly used. The key is transparency and accuracy in your tax filings. You need to be truthful about where business activities actually occur, regardless of your official address. If you're audited, what matters is where you're conducting business operations, not just where your mail goes. If you claim Wyoming for tax purposes but are clearly operating from Connecticut, that would be problematic. However, many digital businesses can legitimately operate from anywhere. Document your work locations, keep records of travel, and consult with a tax professional to ensure you're handling multi-state issues correctly.

Thank you for sharing your experience! Great point about investors potentially seeing through tax avoidance strategies. Did you end up having to register as a foreign entity in multiple states despite having your Wyoming address? Were there any complications with banking or receiving payments with this setup?

Yes, I did end up registering as a foreign entity in California because I spent significant time working there (over 183 days). The Wyoming address wasn't an issue for banking - I used Mercury for business banking and everything was set up online. They just required my EIN, formation documents, and operating agreement. For payments, no complications at all. Most payment processors and platforms don't care about your physical address as long as you have proper business documentation. The biggest challenge was actually keeping track of where I was working throughout the year for tax purposes. I created a simple spreadsheet to log my location each week, which helped tremendously when tax season came around.

That's an interesting point! I've owned exactly 50% since the beginning with no changes to the ownership structure. The only change in my situation was becoming a US tax resident 4 years ago (I filed the 5471 that first year as required when acquiring stock as a US person). After that, there have been zero changes to ownership percentages or corporate structure.

Given there haven't been any ownership changes since your initial filing, your analysis looks even more solid. That initial filing when you became a US resident was correct (Category 3 for acquisition), but the ongoing yearly filings wouldn't be required if you don't meet any of the other categories. One more thing to consider - has the foreign corporation ever made any distributions or dividends to you during these years? Sometimes CPAs file Form 5471 if there are distributions because it provides a cleaner way to report them, even if technically not required. Might explain why they've been insistent on filing it.

I work with international business structures and this is 100% correct. The control test for Category 4 requires MORE than 50% ownership, not exactly 50%. This is a common misconception among accountants who don't specialize in international taxation. That said, there's a specific rule for closely held companies where two 50% owners might both be considered to have "control" in certain circumstances. This usually applies when both owners are actively involved in management decisions. Is that the case with your foreign corporation? Do you and the other owner make joint decisions, or does one of you have more operational control?

Thanks! That's exactly what I needed to know. Did they mention anything about whether putting zero might trigger any kind of review from the IRS? That's my main concern.

The rep actually addressed that directly - putting $0 won't trigger any IRS flags by itself. They said what typically raises questions is inconsistency (like reporting high revenue with zero expenses) or unusual patterns. For casual sellers, zero inventory is completely normal and expected. Just make sure the rest of your Schedule C accurately reflects your activity - if you're truly just selling personal items occasionally, your expenses should be minimal and your profit margins would make sense for a casual seller rather than a regular business.

That's technically correct. If you're selling personal items for less than you paid for them, it's not considered income and doesn't need to be reported on Schedule C. But if you got a 1099-K from eBay (which they now issue for $600+ in sales), you generally need to report it somewhere on your return to avoid a mismatch notice.