Setting Up An Llc In Nevada
[mage source="flickr"]Setting Up An Llc In Nevada[/mage]
Why should I form an LLC in Delaware instead of Washington State?
I live in California, but I’m from Washington State. I know Delaware and Nevada are LLC friendly and California is horrible. But is it really worth it to set up an LLC in Delaware as opposed to Washington State? From a personal standpoint, I’d rather do business with Washington…but don’t want to shoot myself in the foot.
Under which state’s laws should an LLC be formed? State laws governing LLCs vary from state to state. However, if the LLC will have significant business or member contacts (a.k.a. “presence”) within a state, there is usually not much reason to form the entity outside of that state. For example, forming a California LLC for a business centered in California is usually the logical choice for the following reasons:
Filing Fees: An out-of-state LLC that will be conducting business in California must “qualify” to do business in California. This “qualifying” requires the LLC to pay filing fees to the California Secretary of State in addition to whatever filing fees were paid in the state of LLC Formation. California’s filing fees and franchise taxes for “qualifying” to do business in California are the same for an LLC formed in California as they are for a foreign LLC (e.g. and LLC formed in Delaware).
State Taxes: An out-of-state LLC doing business in California will have to pay franchise taxes to California. The corporation may also have to pay taxes and annual fees in its state of formation (even if the LLC is not conducting business in that state). Thus, the LLC is potentially exposed to taxing by more than one state.
Corporate Rules: Regardless of where the LLC is formed, many provisions of California Law, for example, apply if the LLC has a sufficient “presence” in California.