amuck-landowner

Best US state to register an LLC?

Wambo

New Member
I know some people register their business in states that they are not located in. I hear people sometimes create an LLC in places like Wyoming or New Hampshire or something. What does everyone here do? Does it make it more complicated to manage the business legally (taxes and stuff) when operating out of state even if it's easier or cheaper to create the LLC initially? Just wondering what others in the industry are doing.
 

Dylan

Active Member
As far as I know you need to be based in the state that the LLC is being filed.
Not at all -- "foreign" LLCs are quite common for companies that do most of their business out of their home state. You just need to use a registered agent service (many available for a low flat yearly fee) if you're not local to the state you're forming in.

Delaware has traditionally been the most popular choice for foreign LLCs, but Nevada and Wyoming are generally better now.

That said, you really should talk to a tax accountant and make sure you'll actually benefit from forming in another state. There are advantages and disadvantages (namely complexity) and in some cases it may not even be cheaper.
 
Last edited by a moderator:

Shoaib_A

Member
I know a few decent non-US hosting providers who use Incorp Services, Inc.  as their agent for the purpose you mentioned.

Note: I have no personal experience of using their services.
 
Last edited by a moderator:

Geek

Technolojesus
Verified Provider
As far as I know you need to be based in the state that the LLC is being filed.
For a DLLC (Domestic LLC) I believe that's the case, but I don't believe it's a legal requirement.
 
Last edited by a moderator:

DomainBop

Dormant VPSB Pathogen
I prefer to register in my own state but...
 

Delaware has traditionally been the most popular choice for foreign LLCs, but Nevada and Wyoming are generally better now.
The best place in the US right  now  (in my opinion) to form an LLC or a corporation due to its  favorable tax laws and incentives isn't a state but a commonwealth: Puerto Rico.
 

Hxxx

Active Member
I prefer to register in my own state but...

The best place in the US right  now  (in my opinion) to form an LLC or a corporation due to its  favorable tax laws and incentives isn't a state but a commonwealth: Puerto Rico.
Are you sure? Im from PR and currently there is an initiative, well is under evaluation to implement an "IVA" of 16% on each sales, and when I say on each sale it includes between merchants , suppliers, etc, including professional services.

Unless you are a small business whose yearly income is not greater than 40K, i don't see how it benefit corporation in any way.

Respectfully.
 

drmike

100% Tier-1 Gogent
Nevada, New Mexico or Wyoming. Plenty wrote about the topic out there and why.

Usually though tax pros will recommend the State where you are.   But folks around here are virtual businesses, so local State matters not very much.

Delaware is good for share issuing companies - S and C corps.  They have some tax benefits for boat owners last check, I mean yachts.  Lots of banks call Delaware home for some other tax advantage.
 

WSWD

Active Member
Verified Provider
Your home state.  You will normally have to register in your state as well...at the very least as a foreign corporation, so you end up paying the taxes/fees anyway.  The rules vary from state to state, but normally if you have residence in a state, have your business in the state, have a certain amount of equipment in the state, or even conduct business in the state, you need to register as a foreign corporation.

There are all sorts of rules involved, of course, so do your research or talk with an accountant/tax attorney.
 

tmzVPS-Daniel

Active Member
Verified Provider
I think in this case it would really depend on what your business is. Some companies have advantages in being registered in a different state, some are the same. 


Best to talk to your accountant. 

- Daniel :)
 

danielm

New Member
what would be the advantages of registering a company LLC
Tax laws (but it depends on your state) mostly. Corporations usually have more legal regulations to follow such as shareholder meetings and corporate structure (at least where I live).
 

drmike

100% Tier-1 Gogent
what would be the advantages of registering a company LLC
LLC's have no share holders / no shares issued.  Typically they are the cheapest to incorporate.  Often an LLC is just a legal veil over a sole proprietor for the sake of limiting liability.
 

lolitseasy

New Member
Delaware is preferred state for bigger corporations because of their Chancery court and well established legal laws.

So if there is a lawsuit, a lot of data is available from previous years to determine the outcome based on factual data.
 

lolitseasy

New Member
I am always confused about the incorporating question, a few lawyer friends and accountant friends I have talked to have different opinions.

Not everyone owns the equipment in-state and do business in the sate they reside in.

I think for LLC, any profit or loss is just noted as a combined income on your personal taxes and if the sate you reside in charges you state tax, you file taxes on your complete income. If you are not doing any business in the state or don't have any customer who actively owns your service in the sate you reside, I think you can skirt around registering your business in the state you reside in. (Personal opinion, I may be wrong.)
 

WSWD

Active Member
Verified Provider
I am always confused about the incorporating question, a few lawyer friends and accountant friends I have talked to have different opinions.

Not everyone owns the equipment in-state and do business in the sate they reside in.

I think for LLC, any profit or loss is just noted as a combined income on your personal taxes and if the sate you reside in charges you state tax, you file taxes on your complete income. If you are not doing any business in the state or don't have any customer who actively owns your service in the sate you reside, I think you can skirt around registering your business in the state you reside in. (Personal opinion, I may be wrong.)

Really depends on the state.  In the great Peoples' Republic of Kalifornia, for example, the following applies:

For taxable years beginning on or after 1/1/2011, a taxpayer is doing business in California if it actively engages in any transaction for the purpose of financial or pecuniary gain or profit in California or if any of the following conditions are satisfied:

  • The taxpayer is organized or commercially domiciled in California.
  • Sales, as defined in subdivision (e) or (f) of R&TC 25120, of the taxpayer in California, including sales by the taxpayer’s agents and independent contractors, exceed the lesser of $500,000 [1] or 25 percent of the taxpayer's total sales. For purposes of R&TC Section 23101, sales in this state shall be determined using the rules for assigning sales under R&TC 25135, R&TC 25136(b) and the regulations thereunder, as modified by regulations under Section 25137.
  • Real and tangible personal property of the taxpayer in California exceed the lesser of $50,000[1] or 25 percent of the taxpayer's total real and tangible personal property.
  • The amount paid in California by the taxpayer for compensation, as defined in subdivision © of R&TC 25120, exceeds the lesser of $50,000[1] or 25 percent of the total compensation paid by the taxpayer.
  • For the conditions above, the sales, property, and payroll of the taxpayer include the taxpayer's pro rata or distributive share of pass-through entities. "Pass-through entities" means a partnership, an LLC treated as a partnership, or an "S" corporation.


In some states, yes, you can absolutely get away with it.  Others, not so much.  Here in California, there's a huge incentive to do business elsewhere, due to the  wonderful $800/year minimum tax for LLCs and Corporations.  You're more than welcome to incorporate out of state, but you also have to (at the very least) register as a foreign corporation, and still pay the fee.  What's worse is that the banks here will absolutely check. 
 

DomainBop

Dormant VPSB Pathogen
I think for LLC, any profit or loss is just noted as a combined income on your personal taxes
That depends on the state and how the LLC is setup.  In NY for tax purposes, LLC's can be treated like either C or S corporations, partnerships, or sole proprietorships (for the record, my LLC is taxed like a C corporation)

http://www.tax.ny.gov/pit/efile/llc_llp.htm

Tax treatment of LLCs and LLPs

  • The New York personal income tax and the corporate franchise tax conform to the federal income tax classification of LLCs and LLPs. 
    An LLC or LLP that is treated as a partnership for federal income tax purposes will be treated as a partnership for New York tax purposes.
  • An LLC or LLP that is treated as a corporation, including an S corporation, for federal income tax purposes will be treated as a corporation for New York tax purposes or as a New York S corporation if the New York S election is made.
[*]A single-member LLC (SMLLC) may choose to be taxed as a corporation, including an S corporation, or to be disregarded as an entity for federal income tax purposes.
  • If the LLC is disregarded and the single member is an individual, the LLC will be treated as a sole proprietorship for New York tax purposes. 
  • If the LLC is disregarded and the single member is a corporation, including an S corporation, the LLC will be considered part of the corporation for New York tax purposes.
[*]For information regarding the tax treatment of an LLC or LLP for purposes of the New York City General Corporation Tax (GCT) and the New York City Unincorporated Business Tax (UBT) is provided in the New York City Department of Finance Memorandum 99-1.
Tax responsibilities

  • An LLC that is treated as a sole proprietorship must report its business income and expenses on the individual's New York State personal income tax returns.
  • An LLC or LLP that is treated as a C corporation for federal income tax purposes or that has elected both federal and New York State S corporation status must file a New York State corporation franchise tax return.
  •  
 

drmike

100% Tier-1 Gogent
LLC's in a huge percentage are just sole proprietors isolating their personal assets from suits.  It is limited liability, something the Bible and other ancient books speak about being a bad thing.

So you fail, company owes people, you limit your liability.  They can't come collect your lint collection or other assets so long as your corporate veil isn't pierced by your bad antics.  Morally I disagree with such and I see abuses like this all the time.  People incorporate to later fail to pay their obligations and hide behind the corporate protection scheme.

Taxes typically for LLCs are passed through to personal taxes.  Some places don't share with the federal IRS, so as you can imagine some folks self report nothing or very little.
 

MightWeb

New Member
Verified Provider
Delaware is a popular option, especially for foreign companies. As someone mentioned, they have rather well established laws and cases. I also believe their franchise tax is one of the lowest (is it around $300/year for an LLC?). Nevada is also popular, however, I'd definitely find Delaware more interesting.
 

VPS4LESS

New Member
Verified Provider
The 2 best states to form a LLC are Nevada and Delaware these 2 states offer the hands down best protection to the owners and companies by far compared

LLC's in a huge percentage are just sole proprietors isolating their personal assets from suits.  It is limited liability, something the Bible and other ancient books speak about being a bad thing.

So you fail, company owes people, you limit your liability.  They can't come collect your lint collection or other assets so long as your corporate veil isn't pierced by your bad antics.  Morally I disagree with such and I see abuses like this all the time.  People incorporate to later fail to pay their obligations and hide behind the corporate protection scheme.

Taxes typically for LLCs are passed through to personal taxes.  Some places don't share with the federal IRS, so as you can imagine some folks self report nothing or very little.
What would a book of fiction have to do with this post? just asking...
 
Last edited by a moderator:
Top
amuck-landowner