Best State to Form an LLC

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What’s the Best State
to Form Your LLC in?

Summary: For most people, it’s best to form your LLC in your home state. Since that is where you’re legally transacting business. Even an online business is still transacting in your home state. Forming an LLC in Delaware, Nevada, or Wyoming usually ends up costing a lot more. More headaches, too. Two exceptions: non-US residents can choose any state. And real estate investors often form a parent LLC in Wyoming, then the Wyoming LLC owns a child LLC set up in the property state. One quirk: if you live in California, you’ll doing business in California no matter where you form your LLC. So you’ll need to form an LLC in California or register your out-of-state LLC as a foreign LLC.

Video Transcript:

In this video I’m going to tell you why you shouldn’t form your LLC in any of the hyped up states like Nevada, Wyoming, or Delaware and why it’s best for you to form your LLC in your home state. We hear stuff like this all the time. ‘Nevada has no corporate income tax. Wyoming LLCs are the most affordable. Delaware is the best state to form an LLC in.’ To be completely honest with you, it’s mostly a bunch of BS. The disadvantages of forming an LLC outside of your home state far outweigh the perceived advantages. Let’s first talk about domestic LLCs and foreign LLCs. If you form an LLC in the state where you reside, AKA your home state, this is known as a domestic LLC. If you form an LLC outside of your home state, you’ll be required to register that out of state LLC as a foreign LLC in your home state. For example, if you form an LLC in Nevada, but you don’t live there then you’ll be required to register that Nevada LLC in your home state as a foreign LLC in order to do business in your home state. This means you now have two LLCs. One in Nevada and one in your home state. You have to pay two state filing fees. You’ll be required to pay for a registered agent in order to use their address for your Nevada LLC and you have to pay two annual report fees. We used Nevada as an example, but this same thing applies to any out of state LLC. In short, this can easily add up to double the cost and double the headaches since you now have to maintain two LLCs. We know the reason that most people become interested in Nevada LLCs is because they think they are going to save money on taxes. Many people are misled into forming LLCs in other states to take advantage of tax savings. This is simply not true. In this example, if you’ve formed a Nevada LLC and that LLC is doing business in your home state, not in Nevada, you still need to pay taxes in your home state because that is where you’re making money. A helpful saying to remember is that, ‘Taxes are paid where the money is made.’ Again, your foreign LLC will need to pay taxes in your home state since that’s where you’re operating and doing business. Even worse, you may owe additional taxes and fees in Nevada. Why do so many websites talk about Nevada? It’s a great question. Let’s dive into it a little bit more. Again, most of the benefits of forming an LLC outside of your home state are a far stretch from the truth. Both the states themselves and the companies promoting those states stand to gain financially by LLCs being created within that state’s borders. For example, if 40,000 LLCs are formed each year in Nevada, that’s approximately $3 million in annual revenue for the state. That’s just for the state of Nevada alone. It doesn’t include the tens of millions of dollars made by the companies promoting Nevada as the place to form your LLC. The funny thing is, compared to how much Nevada is hyped up there really aren’t that many LLCs formed there each year. There are far more LLCs formed in the states that aren’t hyped up. Furthermore, Nevada companies rank the highest in fraudulent activity. Look, don’t get us wrong. If you live in Nevada and you’re forming your LLC in Nevada, there is nothing wrong with that. If you don’t live in Nevada, again, it’s much better to form your LLC in your home state. What about Wyoming? Although there’s less fraudulent activity that takes place in Wyoming compared to Nevada, this state is also hyped up. Again, the advantages of forming an LLC outside of your home state far outweigh the perceived advantages and they’re not worth the extra hassle, time, or money. In fact, it will cost you a lot more in the long run. Before we discuss forming an LLC in your home state, let’s talk about Delaware. Although small in geographical sense, Delaware is quite large in terms of business activity. In fact, according to Wikipedia, over 50% of US publicly traded corporations and 60% of the fortune 500 companies are incorporated in Delaware. Did you hear the two words that I emphasized? Corporations and incorporated. You’ll notice that these statistics say nothing about LLCs. The fact is that Delaware is a good state to form a company in if you’re a corporation. Delaware is best suited for publicly traded companies that sell shares on the stock market like Microsoft, Apple, IBM, Chase, Coca Cola, or companies that have multiple investors or need to raise venture capital. Most of our customers don’t fall into that category. If you form an LLC in Delaware, but you don’t live there, you’ll still run into the same situation. You’ll need to register your Delaware LLC as a foreign LLC in your home state, pay annually for a registered agent, and pay the annual reporting fees in both states every year. However, if you do live in Delaware then you should form your LLC in your home state. Takeaways. Again, forming your LLC outside of your home state is just not worth the hassle and costs. This goes for Nevada, Wyoming, Delaware, and any other magical state. Attorneys Alexander Davey and Dana Schultz agree. Most of these states are just hyped up. Form your LLC in your home state. What about internet based and online companies? Even if you have an internet based business, you cannot get around your state’s tax obligations simply by forming your LLC out of state. For example, if you live in Florida and you run your online business from your home or mostly from your home, then you have a Florida business. Your best bet is to form your LLC in Florida. Now, forming your LLC in your home state. This is the least expensive, easiest to set up, and the best long term strategy for your LLC. The reason it is the easiest is because it is the right way to do it. If you have any trouble determining where your home state is, ask yourself the following questions. What state are you a resident of? Where do your employees reside? Where do you pay state taxes? If you own property, where is it located? Where is your office or where do you work from? Where’s the business physically located? Where do the LLC members or owners have a physical address? We hope this information is helpful to you and that it has cleared up a lot of hype and misinformation about which state is best to form your LLC in. Now, there is one exception and that’s real estate LLCs. As we mentioned earlier, when operating a business it’s best to form your LLC in your home state. This is usually not the case for real estate LLCs. Of course, if you’re investing in real estate in the state where you live, then yes it makes sense to form your LLC in your home state. If you’re investing in real estate located in another state, it’s best to form your LLC there. Your LLC is doing business in that state if you’re generating rental income, buying and selling, wholesaling, or basically any method where you’re making money from your real estate investments. If you were to purchase property out of state with an LLC that was formed in your home state, you would run into the same issues that we mentioned earlier. You’ll be required to register the domestic LLC in your home state as a foreign LLC in the state where you are purchasing property. Which means you have to pay filing fees in both states, pay for a registered agent in the foreign state, pay annual fees in both states, and deal with the headaches of unnecessarily managing two LLCs. In summary it’s best to form your LLC in the state where you are buying property. I hope this information is helpful for you. If you have any questions, please contact us.

We see this all over the internet:

“Nevada has no corporate income tax.”

“Wyoming LLCs are the most affordable.”

“Delaware is the best state to form an LLC!”

To be completely honest with you, it’s mostly B.S. and doesn’t apply to the vast majority of people forming an LLC.

The disadvantages of forming an LLC outside of your home state far outweigh the perceived “advantages”.

Let us explain…

Domestic LLC vs. Foreign LLC

If you form an LLC in the state where you reside (aka your “home state”), this is known as a Domestic LLC.

If you form an LLC outside of your home state, you’ll be required to register that out-of-state LLC as a Foreign LLC in your home state.

(related article: difference between a domestic LLC and a foreign LLC)

For example, if you form an LLC in Nevada (but you don’t live there), then you’ll be required to register that Nevada LLC in your home state (as a Foreign LLC) in order to do business in your home state.

This means:

– you now have 2 LLCs (one in Nevada and one in your home state)

– you have to pay 2 State filing fees

– you will be required to pay for a Registered Agent in order to use their address for your Nevada LLC

– You have to pay 2 Annual Report fees

(Note: we used Nevada above as an example, but the same applies to any out-of-state LLC.)

In short, this can easily add up to DOUBLE the cost and DOUBLE the headaches since you have to maintain 2 LLCs.

Now, we know the reason that most people become interested in Nevada LLCs is because they think they are going to save money on taxes.

Need help with your LLC? Have a professional LLC service file for you:
Northwest ($39 + state fee) or LegalZoom ($149 + state fee)

Taxes Are Paid Where Money Is Made

Many people are misled into forming LLCs in other States to take advantage of “tax savings”.

This is simply not true.

In this example, if you formed a Nevada LLC and that LLC is doing business in your home state (not in Nevada), you’ll still need to pay taxes in your home state because that is where you are making money.

A helpful saying to remember is:

“Taxes are paid where money is made.”

Again, your Foreign LLC will need to pay taxes in your home state since that is where you are operating and doing business.

Even worse, you may owe additional taxes and fees in Nevada.

So why do so many websites talk about Nevada?

Great question.

Nevada

Again, most of the benefits of forming an LLC outside your “home state” are a far stretch from the truth.

Both the states themselves and the companies promoting those states stand to gain financially by LLCs being created within THAT state’s borders.

For example, if 40,000 LLCs are formed each year in Nevada, that’s approximately $3 million dollars in annual revenue for the state.

And that is just for the state of Nevada alone.

It doesn’t include the tens of millions of dollars made by the companies promoting Nevada as “the” place to form your LLC.

The funny thing is, compared to how much Nevada is “hyped up”, there really aren’t that many LLCs formed there each year.

There are far more LLCs formed states that aren’t “hyped-up”.

Furthermore, Nevada companies rank the highest in fraudulent activity.

Look – don’t get us wrong, if you live in Nevada and you’re forming your LLC in Nevada, there is nothing wrong with that.

But if you don’t live in Nevada, again, it is much better to form your LLC in your home state.

So what about Wyoming?

Wyoming

Although there is far less fraudulent activity in Wyoming compared to Nevada, this state is also hyped up.

Again, the disadvantages of forming an LLC outside of your home state far outweigh the perceived “advantages” and are not worth the extra hassle, time and money.

In fact, it will cost you a lot more in the long run.

Forming your LLC where you reside is your best bet.

Before we discuss forming an LLC in your home state, let’s talk about the first state to ratify the United States Constitution…

Delaware

Although small in a geographical sense, Delaware is quite large in terms of business activity.

In fact, according to Wikipedia, over 50% of U.S. publicly traded corporations and 60% of the Fortune 500 companies are incorporated in Delaware.

But, did you see the two words we underlined above?

Corporations” and “incorporated“.

You’ll notice these statistics say nothing about LLCs.

The fact is that Delaware is a good state to form a company in… if you’re a Corporation.

Delaware is best suited for publicly traded companies that sell shares on the stock market (like Microsoft, Apple, IBM, Chase, Coca-Cola), or companies that have multiple investors or need to raise venture capital.

But, most of our customers do not fall into that category.

If you form an LLC in Delaware (but don’t live there), you will still run into the same situation:

– you’ll need to register your Delaware LLC as a Foreign LLC in your home state
– pay annually for a Registered Agent, and
– pay the Annual Reporting fees in both states every year

However, if you do live in Delaware, then you should form your LLC in your home state.

Home State vs. “Magical States”

Again, forming your LLC outside of your home state is just not worth the hassle and cost.

This goes for Nevada, Wyoming, Delaware, and any other “magical” state.

Attorneys Alexander J. Davie & Dana Shultz agree: most of these states are just hyped up. Form an LLC in your home state.

Online Business

We get lots of questions like this: “My business is 100% online. Where should I form an LLC?

The answer in this case is still an LLC in your home state. Do you think by just being “online” that you can get around corporate law and tax law? That’s not how it works.

Most people run their online business from their home. That’s where you’re legally doing business. And that’s where you should form your LLC.

Even if you travel often or run a location-independent business, the states don’t really care. You’ll need to pick a state where you have the greatest “connection”. This is most likely your home state, your state of residency, where you have your driver’s license, and where you pay state taxes.

My customers are all over the country/world

A lot of people are confused about the legal definition of “doing business”. They think it’s about where the customers are.

It’s not. It’s about where you are running and operating the business from.

You should form your LLC where you’re running the business and working from.

And just because you have customers or clients located in a few state doesn’t mean you need to register your LLC as a Foreign LLC in that state.

Issues with Seller’s Permits

Many LLC University® readers write to us about the issues they face after forming their LLC in the wrong state. We recently received this comment:

I live in California. I got some bad advice and made the mistake of registering my LLC in Utah back in June. Then I realized that I also needed to register in California as a Foreign LLC since I need a sellers permit for wholesale purchases.

If you need a Seller’s Permit (aka Reseller’s Permit or Resale Certificate), you’re likely going to to run into similar issues. What really stinks about this situation is how much time and money has already been invested. In our example above, this reader now has to 1) register his Utah LLC as a Foreign LLC in California, 2) dissolve his Utah LLC and form a California LLC, or 3) Re-domicile (also known as conversion or re-domestication) his Utah LLC to California… which isn’t the easiest process. Then he has to sort out bank accounts, address updates, IRS updates, and all the other registrations that are in place with the Utah LLC.

You’re also likely to run into similar issues if you have to register your LLC with your state’s Department of Revenue (ex: sales tax registration) but your LLC is formed in another state.

LLC in Your Home State

This is the least expensive, easiest to setup and the best long-term strategy for your LLC.

The reason it is the easiest is because it is the right way to do it.

Our friends at Northwest Registered Agent say it best:

“We get a lot of people these days coming up with some pretty goofy ideas. We always try to send them in the right direction before they go off and setup their ‘5 LLC asset protection strategy’ to protect their new Taco stand idea.”

If you have any trouble determining where your home state is, ask yourself the following questions:

– What state are you a resident of?
– Where do your employees reside?
– Where do you pay state taxes?
– If you own property, where is it located?
– Where is your office/where do you work from?
– Where is the business physically located?
– Where do the LLC members/owner have a physical address?

We hope this information is helpful to you.

We hope it cleared up a lot of the hype and misinformation about which state is best to form your LLC in.

Now, there are some exceptions…

Non-U.S. Citizens and non-U.S. Residents

Note: You don’t have to be a US citizenship or a US resident to form an LLC in the USA. Anyone can form an LLC in the USA.

If you are a non-US citizen or a non-US resident, it comes down to how the business is run.

If you’re going to have an office, employees, or physical presence in the USA, then you should form your LLC in that state. If you’re business will have no physical presence in the USA, then you can choose any state.

The type of US taxes and state taxes you pay will depend on how your business makes money. There isn’t a simple answer for the what the “best state” is for the lowest taxes for non-us residents/citizens. It all comes down to the type of business you have.

And this isn’t something we can answer for you. You’ll need to speak with an accountant familiar with international taxes and your business.

Real Estate LLCs

As we mentioned earlier, when operating a business, it’s best to form your LLC in your home state.

This is not the case for real estate LLCs.

Of course, if you are investing in real estate in the state where you live, then – yes, it makes sense to form your LLC in your home state.

But if you are investing in real estate located in another state, it is best to form your LLC there.

Your LLC is doing business in that state if you’re generating rental income, buying and selling, wholesaling, or basically any method where you’re making money from your real estate investments.

If you were to purchase property out of state with an LLC that was formed in your home state, you would run into the same issue that we mentioned earlier.

You will be required to register the Domestic LLC in your home state as a Foreign LLC in the state where you are purchasing the property.

Which means that you now have to pay filing fees in both states, pay for a Registered Agent in the foreign state, pay annual fees in both states, and deal with the headaches of unnecessarily managing 2 LLCs.

In summary, it is best to form your LLC in the state where you are buying property.

Matt Horwitz
Founder & Educator, LLC University®
Forming an LLC shouldn't be so complicated. Our step-by-step guide will make the process a breeze – and no complex legal jargon! LLC University® teaches people how to form an LLC for free in all 50 states. We hope you find our free guides and resources helpful in your business journey.
Disclaimer: Nothing on this page shall be interpreted as legal or tax advice. Rules and regulations vary by location. They also change over time and are specific to your situation. Furthermore, this comment section is provided so people can share their thoughts and experience. Please consult a licensed professional if you have legal or tax questions.

101 Comments

  1. Houston March 7, 2018

    Hello,

    I am figuring all this out for the first time and am overwhelmed with information. I believe because I am a contractor, generating business with homeowners for repairs on there homes — paid for most of the time by homeowners insurance companies, working under a licensed home improvement company I could benefit from having a LLC with an election of S corp in another state. From what I’m reading on other sites I may not have to do the foreign qualification since I’m not selling products technically. I think I could benefit from doing this because I would not have to pay any franchise taxes or any other corporate taxes. I may be wrong but, paying another state to file might be worth it in my case because of my companies potential income.

    If my company is making over a certain amount of money per year is there a value in doing the LLC with S corp election in another state with no corporate tax of any kind? The State I live in has no income tax as well so I feel this could really be beneficial.

    reply
    • Matt Horwitz March 10, 2018

      Hey Houston, we can’t comment on your tax situation. You’ll need to speak to an accountant about that. However, it sounds like you’re doing business in your state, so I would not form an LLC (with or without an S-Corp election) in another state since you’re legally doing business in your home state. The comment about “because I’m not selling products” is not the only factor to consider. Your state’s legal definition of “doing business” is far more detailed than just than. Hope that helps and thanks for your understanding.

      reply
  2. Miki March 7, 2018

    I would like to form an LLC with the two words in the name where ’’association’’ is the second word. New York City does not allow to register ‘’association’’ in the name unless you are NGO. I’m a resident of New Jersey, but the business will operate in New York. Is making sense to open a company in Delaware or Jersey? Can I operate under that name in NYC?

    reply
    • Matt Horwitz March 10, 2018

      Hey Miki, nope. If you form an LLC in another state and are doing business in New York, you’ll need to register that entity as a Foreign LLC in New York. And when you file that Foreign LLC registration, it’ll be rejected for the same reason.

      reply
      • Miki March 13, 2018

        Thank you very much. It was useful.

        reply
        • Matt Horwitz March 21, 2018

          You’re welcome Miki. Glad to hear :)

          reply
  3. Miki March 8, 2018

    if I live in New Jersey and open a company in NYC where do I pay taxes?

    reply
    • Matt Horwitz March 10, 2018

      Hey Miki, we can’t comment on your unique tax situation. We recommend speaking with an accountant. Your accountant may likely file in both states, but apportion your income as necessary. Hope that helps and thanks for your understanding.

      reply
  4. Miki March 14, 2018

    Thank you

    reply
  5. Christian March 17, 2018

    Hi Matt,
    Thank you for the great insight. I would like to form an LLC with 2 other partners. Two of us are in OR and one is in HI. Does this mean we should form the LLC in OR and a foreign LLC in Hawaii? or does it matter?
    Thank you for your advice,
    -c

    reply
    • Christian March 17, 2018

      This is for an online ecommerce business

      reply
    • Matt Horwitz March 27, 2018

      Hey Christian, apologies for the slower reply. It comes down to where there is more substantial business being done. I’d say with the majority of the LLC Members being in Oregon, you should be okay with forming a Domestic LLC in Oregon. If there is a lot of business activity taking place in Hawaii, then it would also be advisable to register your Oregon LLC as a Foreign LLC in Hawaii. You may also want to run this by a few attorneys and get their take on it; some in Oregon, and some in Hawaii. Hope that helps!

      reply
      • christian March 27, 2018

        Thank you very much Matt. Really do appreciate your feedback.

        reply
        • Matt Horwitz March 27, 2018

          You’re very welcome Christian!

          reply
  6. lisa March 20, 2018

    Hi Matt,

    Very informative.

    I registered a LLC at NV, and bought a rental there. I live in CA. Do I need to register a foreign LLC in CA?

    Thank you.

    Lisa

    reply
    • Matt Horwitz March 27, 2018

      Hi Lisa, glad to hear! Yes, you should register your Nevada LLC as a Foreign LLC in California (the form is Application to Register a Foreign Limited Liability Company, Form LLC-5). The reason is that California has some of the most strict laws regarding “doing business”. Simply by you taking care of your rental in Nevada from your home in California constitutes doing business in California.

      California has these strict regulations in place, not just in the corporate law, but also in the Revenue and Taxation law. Meaning that, not only can the California Secretary of State require a Foreign LLC registration in California (and has the power to impose fines), but the California Franchise Tax Board can assess fines and penalties for illegally transacting business in the state and not paying the $800 annual franchise tax as well as filing other state-level tax returns.

      On top of that, the CA FTB can require back payment for all years which you did not pay the annual franchise tax (whether or not your Nevada LLC was registered in California). And yes, a California LLC is expensive, but that is the cost of doing business in (rather, living in) California. Hope that helps.

      reply
      • lisa March 27, 2018

        Thank you for the reply, and very helpful.

        I forgot to mention that I have an agent who takes care of the property in NV. Does this make any difference?

        Thank you.

        Lisa

        reply
        • Matt Horwitz March 27, 2018

          Unfortunately, that really doesn’t matter for California residents. Hope that helps clarify a bit further.

          reply
          • lisa April 5, 2018

            Thank you !!!

            Lisa

            reply
            • Matt Horwitz April 6, 2018

              You’re welcome Lisa :)

              reply
  7. Kelly March 22, 2018

    Hello! I reside in Virginia, but plan to have my business located in TN. Is it better to set the LLC up in one or the other? I’m assuming that dual filing will be required regardless?

    Thanks!

    reply
    • Matt Horwitz March 26, 2018

      Hi Kelly, you could form a Domestic LLC in Virginia and then register as a Foreign LLC in Tennessee, however if you’re going to do business and run the business from Tennessee, you could just form a Domestic LLC in Tennessee. Hope that helps.

      reply
  8. Travis March 23, 2018

    Hi Matt,

    Thanks for the informative article.

    My question is what if I’m starting a new business and only rent a home and do not have an office in the state I live? In this scenario I cannot register my LLC in my home state (AZ) as they require a registered address unless I use the home I’m renting.

    I would prefer to not list the house I rent as my official business address as it may not be long term and they do not allow me to set up a PO Box for this purpose. Additionally, I refuse to spend money on an office while I’m starting out, especially to form the LLC in my home state.

    Is this a unique situation where it might make sense to file in say Delaware but then file a Foreign LLC in AZ?

    Thank you again and in advance for any assistance Matt.

    reply
    • Matt Horwitz March 27, 2018

      Hey Travis, you can hire a Commercial Registered Agent, called a Commercial Statutory Agent in Arizona. Not all Registered Agent companies allow this, but the ones we recommend do (Arizona Statutory Agent) – In your LLC’s Articles of Organization, you’ll use their address for your Statutory Agent for Service of Process… and you can also use their address as your Arizona Known Place of Business. Any mail they receive for your LLC will be scanned and then uploaded to your online dashboard (and you’ll get an email notification). Hope that helps.

      reply
  9. Moe Iqbal April 1, 2018

    Thank you for the Information. Question: What if I am doing business in Texas but living in PA, Where do I form the LLC? I am also doing business in DE and formed a DE LLC. I do not do any business in PA….

    Thank you

    reply
    • Matt Horwitz April 2, 2018

      Hey Moe, great question. Let me clarify. You’ll want to form the LLC in the state where you’re conducting business. In your case, that means forming a Texas LLC. The reason why “home state” is mentioned so much throughout this article is because most people are doing business in their home state. We’ll do a better job of clarifying that during future updates. Thanks and hope that helps!

      reply
  10. Mark Howes April 3, 2018

    Hi Matt: Amazing site with lots of relevant info and advice.

    My situation is as follows and I need some direction even though I understand your mantra of filing in one’s home state to prevent doubling of effort and fees.

    I am taking over a business that is located and owned by an individual in Arkansas. The member/manager has defaulted on the franchise payments and there are no other members of this Domestic LLC.

    In preparation to take over I acted too quickly and filed Articles of Organization for a Foreign LLC in my home state of New Jersey. I did this knowing that my office in NJ would operate as headquarters whereas the nexus of physical sales currently occur in Arkansas. And from a marketing perspective it reinforced the brand’s namesake to remain a Domestic LLC within the State that the consumer associated with it. But take away all that and you have a BBQ seasoning that is manufactured in Alabama and distributed wherever it is sold which could be Arkansas, New Jersey or any place in the USA.

    I have since discovered that the Franchise Tax Report for Arkansas indicates “incomplete” filings for the last 3 years with another due in May 2018. The status of the LLC is officially listed as “revoked”.

    The listed officer has no intention of paying the delinquent fees prior to my proposed acquisition of the company. I could change the company name, however the real value is conferred in the actual name of the company “Ivan of the Ozarks LLC”. In addition I listed the company name as such when forming the NJ based Foreign LLC.

    I have read that I can file the delinquent annual report/franchise tax and pay past due franchise fees plus penalty and interest to reinstate. I can also edit information to remove the previous member/manager and reflect my involvement. The AR registering agent would remain the same.

    Per Arkansas Secretary of State: “If you do not file your franchise tax report and fees, there is a $25 penalty fee. The secretary of state will charge 10% interest per year on the tax and penalty from the due date until it is paid. The total tax, penalty, and interest for any one year will not be more than twice the tax owed by the corporation.”

    Now I am in a pickle with many questions.

    • Should I ammend my NJ filing from being a Foreign LLC to that of a Domestic LLC using the Ivan of the Ozarks, LLC name as submitted to NJ?

    • Should I file for the dissolution of the Arkansas Domestic LLC filing (and pay associated franchise fees and taxes to do so) and become a fully NJ Domestic LLC?

    • Should I pay related costs to reinstate the company and maintain as an Arkansas Domestic LLC?

    • Should I file for dissolution of NJ Foreign LLC and rectify matters with Arkansas filing to be a Domestic LLC with no NJ filings on record?

    There are so many ways to approach and I want to be make matters better and not worse and do not want to incur any legal ramifications. They all involve cost but it is the long run aspect that I am taking into consideration in conjunction with you advice.

    Thank you in advance!

    reply
    • David April 6, 2018

      Hey Matt, enjoyed looking through your site. A lot of good info here. I have a question. Looking to set up LLC for start up company with initial target group being Whole Foods, Sprouts, etc. I am currently living in Georgia but plan is to be back in home state of Alabama within a couple years. Should I incorporate business in Georgia and when I move transfer llc to bama or incorporate it as foreign llc? I have family in bama so theoretically I could use their address for business to incorporate initially. Just do not want to cause headaches in future. Am I over thinking this?

      reply
      • Matt Horwitz April 8, 2018

        Hey David, thanks :) No, you’re not overthinking. This is called proper planning. If you know you’ll eventually be doing business in Alabama, then this is an easier setup… since “moving” an LLC is a pain in the rear, it’ll be easier to form a Domestic LLC in Alabama and then register that LLC as a Foreign LLC where you’re also doing business in Georgia. Then after you move, cancel/dissolve your Foreign LLC filing in Georgia. Hope that helps!

        reply
    • Matt Horwitz April 8, 2018

      Hey Mark, you said “I am taking over”, making it sounds like it’s not done yet. So why even buy the Arkansas LLC? Maybe consider just buying the assets the LLC owns. If you’re not working with a competent business lawyer in this transaction there are a HANDFUL of potential pitfalls and liabilities you may be assuming with buying this LLC. If you decide to and are able to just buy the assets of the LLC, then you can cancel your Foreign LLC filing in NJ, form a new LLC, then approach this transaction from a fresh angle and negotiation. As far as your questions, we appreciate you asking us, but there is just far too much going on here for us to even point you in the right direction, besides that of working with a business lawyer. Hope you get to the bottom of things. And thanks for your understanding.

      reply
  11. Mark Howes April 9, 2018

    I totally hear you on the complexity of my situation and thank you for providing some basic insights — will sort it out — thanks for replying!

    Great advice!

    reply
    • Matt Horwitz April 9, 2018

      You’re welcome Mark! Thanks again for understanding.

      reply
  12. Dala April 18, 2018

    I’m from Europe and non USA resident, want to do only Wholesaling of single-family homes in USA. Being non USA as I understand I can only do it with an LLC.
    So if I open in Wyoming an LLC (because it is cheap), and start wholesaling in Arizona, do I also need to register my Wyoing LLC as a Foreign LLC for Arizona and start paying fees for 2 like you mentioned above? If so then I need to choose only 1 state and focus there. Gota be a good state for wholesalers :D

    reply
    • Matt Horwitz April 20, 2018

      Hey Dala, yes, you’re correct. If you’re doing business in Arizona, then the LLC should either be formed there as a Domestic LLC or formed out of state and then registered there as a Foreign LLC. Hope that helps. Best wishes with the wholesaling biz!

      reply
  13. Albert April 20, 2018

    Hi Matt I have real estate properties in florida and have used a family address as the registered agent. The person, whom I nominated as my registered agent no longer lives in the property. It is now a rental. Do I need to change the registered agent. Also does the person who acts as a registered agent have any liabilities.

    reply
    • Matt Horwitz April 21, 2018

      Hi Albert, yes, you’ll need to update/change your LLC’s Registered Agent with the state. We have info on that here: how to change Registered Agent for Florida LLC. The Registered Agent is not liable for actions of the LLC. The Florida Registered Agent requirements are listed in #3 of section 605.0113 of the Florida Statutes. Hope that helps!

      reply
  14. Joe Walters April 23, 2018

    Hello,

    First let me say that I love your site, thanks for being a great source for honest advice. I have a unique situation that I was hoping you could help me with. I an going to be setting up an LLC to operate a small marine charter business, 1 vessel, which will do business between two states, Florida in the winter and Washington, DC in the summer. Until January 2018, I was a resident of Maryland where I held property. I currently live aboard my yacht and no longer own property in any state. I am trying to decide which state I should claim as my residency in and as you advise create my LLC in that state. Are there any advantages/disadvantages, from the LLC perspective, of choosing Washington, DC or Florida? Thanks for your assistance.

    Joe

    reply
    • Matt Horwitz April 27, 2018

      Hey Joe, thanks for the awesome comment! You’re very welcome :) Since we don’t rip apart and compare LLC state statues in great depth (regarding your questions about FL vs DC), I’m not sure. To get that level of granularity, you’ll need to speak with an attorney and/or a tax attorney. However, whichever state you choose as the “base LLC” (the domestic LLC), you’ll need to register that LLC (as a foreign LLC) to do business in the other jurisdiction. And regarding the best choice regarding state residency, that conversation would need to be had with an accountant. Thanks for your understanding and hope that helps!

      reply
  15. AJ April 30, 2018

    Hi Matt,

    Great article with lots of information in forming an LLC!

    I was almost ready to set up a WY based LLC to buy a property in NJ, rehab it and resell through this LLC. But after reading your article, I realized, it may not be a wise strategy.

    Therefore, wanted to get your thoughts on why most advice out there is to have out of state LLC, when eventually, its a pass-through entity and taxes would still be hit the individual investor’s filing. Also, that the WY based LLC still needs to register in NJ as Foreign LLC, essentially making work twice. Why NJ RE vehicle LLC is not prefered?

    Appreciate your thoughts in advance.

    Regards,
    AJ

    reply
    • Matt Horwitz April 30, 2018

      Hey AJ, thank you! There are a lot of companies have a self-interest in promoting certain states. And it’s not that some of these states – like Wyoming – don’t have good laws… I just don’t think a lot of the people who own these sites give a crap about their readers and customers. They don’t property educated them about Foreign LLC registrations and all the details. They seem to always paint a “half picture” (at best). Having said that, Wyoming does have strong asset protection laws in regards to charging order protection, so some investors with more assets may form a Parent LLC in Wyoming and then form an LLC in the property-state, and have the property-state LLC (the Child LLC) owned by the Wyoming LLC. So there is some truth to it. However, you’ll need to weight the benefit of that against the cost and energy in order to rehab and sell one house. And to answer your last question, one of our goals is to inspire the industry to be more transparent. Hopefully we’ll get their with time and patience ;)

      reply
      • AJ May 10, 2018

        Thanks Matt for the response! It makes sense and I agree, patience is the key :)

        reply
        • Matt Horwitz May 16, 2018

          You’re welcome AJ :)

          reply
  16. Vincent May 10, 2018

    Hello Matt, thanks for all the great information. I am still a little confused on my particular situation and am hoping you can clarify. I am a US citizen, in the process of setting up a career coaching business, so the actual conduct of the business will be accomplished over Skype/Internet to whichever State the individual lives in. I currently live and work overseas and no longer have a state of residence. Recommendations on the best State to set up my LLC? I will be the sole proprietor with no additional employees.

    reply
    • Matt Horwitz May 16, 2018

      Hi Vincent, in this case, where you’re doing business is a bit gray. Doing business is about where you’re working from, not where the clients are. The safest route to take would be to form the LLC in the state you use as your US residency… likely also the state on your driver’s license and the state where you file taxes. Hope that helps.

      reply
  17. Wil Warnock May 12, 2018

    I am a resident of California and want to create an LLC for international real estate investment purposes.

    Would it be your recommendation to create a CA LLC

    reply
    • Matt Horwitz May 16, 2018

      Hi Wil, I’m not sure where an LLC should be formed for international real estate. That would be a question for a real estate attorney familiar with the country where you’re purchasing. Having said that, if you form an LLC out of country, there is a good chance – due to CA’s strict rules – that that LLC may need to be registered to do business in California. Hope that helps.

      reply
  18. Jeremy Jackson May 13, 2018

    Hello Matt, thanks for the page and video great info. I hopen you can help me with something. I am in the Army. I am currently stationed in Germany and when I leave here will be going to where ever the Army says. As you can imagine in the military we move every 3 years. I guess you can say my home of residency or rejection order is Texas since that is where I lived when I joined the military, that is the state I claim my taxes through and have my drivers license in. I do not own any property there and have no relatives living there so I don’t have a physical address there anymore.
    My question is I want to create an LLC for an online ecommerce business and I am not sure what state I should set it up in. I do not know where I am going to live when I retire which won’t be for another 3 to 6 years. Should I set up in Texas or somewhere else given my situation?

    Thanks for you help

    reply
    • Matt Horwitz May 16, 2018

      Hi Jeremy, you’re very welcome. In this case, I would form the LLC in Texas. Make that your “base” LLC. If later, you live in another state for some period of time, you can register your Texas LLC as a Foreign LLC in that state, then withdrawal the Foreign LLC registration when you move. Also, if you don’t have an address in Texas, I recommend hiring Northwest Registered Agent. They’ll serve as your LLC’s Registered Agent and they’ll also let you use their office address throughout the entire Texas LLC registration. Any mail sent to your LLC will be scanned by them and uploaded to your online dashboard. Hope that helps.

      reply
    • Jeremy Jackson May 18, 2018

      Matt

      Thank you very much. Yes that helped alot and you are the only one to ever answer me. I have asked atleast 20 to 30 other entities and lawyers and none have ever replied. Thank you..

      reply
      • Matt Horwitz May 18, 2018

        Wow, that’s crazy to hear. However, super happy we were able to help provide some clarity. Best wishes with the business Jeremy!

        reply
  19. Felix Leisinger May 18, 2018

    Hi, I incorporated an LLC in Delaware a few years ago and pay every year some USD550 to dbi for annual tax and filing etc. I’m still overseas and have not made any use of my LLC just paying Delaware tax and agents fees for nothing. I asked dbi to dissolve the LLC and they want about USD1000 all in all. However you say that most states dissolve a company if the tax is not paid. So should I simply stop paying the tax and forget it? Thanks for helping in this.

    reply
    • Matt Horwitz June 17, 2018

      Hi Felix, while you can just ignore the Delaware LLC, it’s better to dissolve it. We have information here: how to dissolve a Delaware LLC. Hope that helps.

      reply
  20. Robert May 19, 2018

    Hi Matt,

    Thank you for very interesting article and video. I have one thing to be clarified. I’m planning to start single-LLC (CA resident currently) and I’m considering Nevada for it. My business is very small and I have only one customer in the Europe (I’m their subcontractor in the US, working across the US and online). How about that case? My customer is in the Europe and I will invoice them. In that case is not precise where the place of making money is (but financially is Europe). Will it be a good move to setup it in Nevada?

    Thank you.

    reply
    • Matt Horwitz June 17, 2018

      Hi Robert, in this context, the state laws about doing business don’t depend on where your clients are, it depends on where you’re running and operating the business from. Which in your situation, is California so you should form your LLC in California. Further, California has very strict laws (corporate laws + tax laws) about doing business. There are some pretty large penalties involved and if caught, those would be imposed… and in addition, you’d need to register your Nevada LLC as a Foreign LLC in California anyway. Hope that helps.

      reply
  21. Stephen May 19, 2018

    Hello I do Internet real estate in other states but I live in New York and I do real estate transactions here also I just recently put together a parent holding LLC but I want to do to children LLCs in all the states was New York a bad decision and how do I change that to say like Wyoming or Nevada

    reply
    • Matt Horwitz June 17, 2018

      Hi Stephen, it’s not as black and white as that, however, the holding company being located in Wyoming is more popular (for charging order protection) and then the Wyoming LLC owns the child LLCs, which are formed in the states where the real estate transactions are taking place. In order to change that, it would be easiest to dissolve the NY LLC and then form the new LLCs. Hope that helps.

      reply
      • STEPHEN June 19, 2018

        but I live and do transactions in ny also and if I do that don’t I still have to pay ny taxes for operating their and what is the difference between ny and Wyoming charging order

        reply
        • Matt Horwitz June 20, 2018

          Then the New York LLC can be owned by the Wyoming LLC or you can just operate the New York LLC. Yes, you’ll still be paying your taxes in New York since that’s where you reside. The differences between Wyoming and New York charging order protection are too detailed for me to spell out here. You’d have to dig into the research on that or speak to an attorney. Thank you for your understanding.

          reply
  22. Naeem Oj May 22, 2018

    Hi Matt,

    I thank you for the valuable information you provide in the page. I need your advice. I am non US resident / non US citizen (LIBYAN CITIZEN) willing to form LLC. My questions are:

    Are there any restrictions on certain countries such as Libya to form LLC in US?

    Is it possible to form LLC for two different activities? online business (DROP-SHIPPING, AMAZON, SHOPIFY) & buying goods from US merchants such as online car auctions. OR this basically fits under Online General Trading?

    Am I going to be able to open a bank account without visiting the US, since I can’t travel to the US due The complexity of the visa?

    Your advice highly appreciated.

    Thanks
    Naeem

    reply
    • Matt Horwitz June 17, 2018

      Hi Naeem, you’re very welcome! No, there are no citizenship or residency requirements to forming an LLC in the U.S. Yes, you can group all your business activities under 1 LLC. No, you’ll need to physically be present in order to open an LLC bank account. Hope that helps.

      reply
  23. Professor.Nahabu June 8, 2018

    Thank you, Mr. Matt, for the video it is really straight to the point…

    reply
    • Matt Horwitz June 18, 2018

      You’re welcome professor. Thank you!

      reply
  24. Nick June 26, 2018

    Hey Matt,

    Thanks for setting up this site – it’s awesome that you’re providing such a resource for entrepreneurs.

    I’m a US citizen living abroad so I think I may be an outlier in your audience. I saw one other comment in this thread from soon-to-be retirees who want to form an LLC in the US before returning but I’m not sure if it applies to me.

    Right now, I think it may be best to create an LLC in my home state (Illinois) and have a family member as the registered agent. I won’t be doing any business in Illinois – but I figure it’s best to have my bank there since that’s where I’ll be going back to regularly. Would there be any benefit to setting up an LLC in a different state if I still plan to bank in Illinois?

    I consulted another expat entrepreneur and he recommended that I register the LLC in another state (Delaware) and then register in Illinois as a foreign LLC. I think this would be more logistically difficult and I don’t know what benefits would arise from this.

    Any feedback would be greatly appreciated.

    reply
    • Matt Horwitz July 30, 2018

      Hey Nick, thanks for the kind words :) Yea, if you’re going to bank in Illinois, far easier to form an LLC in Illinois then form an LLC in Delaware and then foreign qualify in Illinois. Hope that helps.

      reply
  25. Jay June 30, 2018

    Hi Matt,
    Thank you so much for the video. It’s really great.
    I have few rental homes, these homes are in few different states, such as OH, FL, WA, CA. I live in CA.

    Can I just do CA LLC and put all these home in this CA LLC, or do I need to have an LLC for each state where the rental homes are in.

    Thanks
    Jay

    reply
    • Matt Horwitz August 3, 2018

      Hi Jay, you’re very welcome! We recommend speaking with a business/real estate attorney as well as a tax professional regarding the pros and cons of each setup below. This list is not exhaustive, but here are some ideas:

      1. Form a CA LLC. Then register your CA LLC as a Foreign LLC in FL, OH, and WA. It’s the same entity owning all properties. The Foreign LLC qualification allows the CA LLC to do business in the other states.

      2. Form 4 LLCs, one in each state. Better asset protection than #1.

      3. Form 4 LLCs, however, the FL, OH, and WA LLCs are owned by your CA LLC instead of you. Reason for this is that CA has more strict laws (corporate law and tax law) around “doing business”. Also, properties in FL, OH, and WA could be at risk if CA LLC runs into legal issues.

      4. Form a holding company in a state with stronger asset protection laws (i.e. charging order protection), such as Wyoming. The WY LLC is the Parent LLC. Then form a Child LLC in CA, FL, OH, and WA. All 4 LLCs are owned by the WY LLC. The word Parent/Child aren’t a special type of LLC, it’s just easier to discuss them in this manner. Said another way, the LLC Member (owner) of each of the 4 LLCs is the WY LLC and not you. You are the Member of the WY LLC. This is likely the strongest asset protection option in this list.

      Hope that helps!

      reply
  26. Katie July 9, 2018

    Matt,

    Thank you for the information!

    I am wondering if you could answer a question for me. I am starting up a consulting business. I am in a transitional period and living with family in Minnesota, but I also spend quite a bit of time in Florida. Ultimately, I will get a place in Florida and go back and forth between my family’s home in MN and a place in FL, so I will be based in two locations and just work from wherever I happen to be. Do you think it would make sense to set up in both states right away? Or, start with MN and then add FL once I have an address?

    Thank you!

    Katie

    reply
    • Matt Horwitz August 12, 2018

      Hi Katie, you’re very welcome! I’d say it’s easiest to pick the state where you’ll be most. You can’t just “add” a state to your LLC. For example, if you form an LLC in Minnesota, then want to do business in Florida, you’ll need to file a Foreign LLC registration in Florida which allows the Minnesota LLC to do business there. But you’ll need to maintain 2 LLC filings (note: it’s just 1 LLC though). I would pick the state that you end up making your state of residence. Where you’ll have your driver’s license, car registered, pay state taxes (although FL has not state income tax), etc. To add to that, if you think you’ll eventually make Florida your residence, I’d form there for ease. Hope that helps.

      reply
      • Katie November 25, 2018

        Thank you very much, Matt!

        reply
  27. Wes July 10, 2018

    Matt,

    A real estate attorney was recommending that I create an LLC for a condo I purchased that my son is going to be living in (we’ll pretty much only keep it until he’s done with college and then sell it). We don’t really intend to get into the rental business when he’s done with it. Since no money would be coming into the LLC, and any expenses would have to be paid by me personally, is there any reason to do this? It couldn’t function as a true business under these circumstances since no money would be coming in; I was simply trying to give him a place to live without paying rent. Would it be any protection if anything happened at that condo, or should I consider it much as I do my own home? I didn’t form an LLC for my own house to shield myself from any liability that may occur due to someone falling on my stairs, etc., so not sure why I would for this place either.

    Thanks,

    Wes

    reply
    • Matt Horwitz August 12, 2018

      Hi Wes, good question. You don’t have to form an LLC and then transfer the property to the LLC, although you certainly could. It seems the premise here is liability protection. You could either form an LLC or keep it your name and get a good insurance policy, as you do with your personal residence. I should also mention that even a home titled in an LLC should also have an insurance policy. Hope that helps.

      reply
  28. Charles July 12, 2018

    Matt –

    I reside in Arizona but I want to remain completely anonymous when setting up my LLC. Is this possible in Arizona or do I need to look at states that provide anonymous LLC’s then file a Foreign LLC in Arizona? It will be an online business selling in 46 states. Your insight is appreciated.

    reply
    • Matt Horwitz August 12, 2018

      Hi Charles, instead of a Domestic/Foreign LLC setup, I would also consider a Parent/Child LLC setup. For example, forming a Domestic LLC in Wyoming that owns a Domestic LLC in Arizona. Hire a filing company (we recommend Northwest Registered Agent) since they will sign as Organizer, be the Registered Agent, and let you use their address throughout the Wyoming LLC Articles of Organization. Then form a Domestic LLC in Arizona that is Member-Managed and the Member (owner) is your Wyoming LLC. This is recommended since Arizona wants either the Manager or Members disclosed. Form the Wyoming LLC first, then the Arizona LLC second. You could also hire Northwest to form the Arizona LLC since they’ll let you use their address throughout the filing, serve as the Statutory Agent, and sign as Organizer. Any mail sent to your LLC will be scanned by them and uploaded to your online account. Hope that helps.

      reply
  29. Maurice July 13, 2018

    Matt, I am sorry this may have been answered before, 2 questions.

    1. So I live in CA but have a rental house in KY. If I choose to put it under a LLC, do I still need to pay the $800 fees in CA? What are your thoughts on it? Pros and Cons.

    2. I do a lot of trading, mostly options (calls and puts) and I think I can qualify to do it under a business, what are your thoughts? Would LLC be best? And I assume it has to be in CA since I live here. What advantages to do it under a business instead individual?

    Thanks in advance, I loved all you videos. Wish you much success.

    Maurice

    reply
    • Matt Horwitz August 12, 2018

      Hi Maurice, thank you for the kind words :) 1.) Yes, you would still pay the annual fees in California, however, since you’re doing business in Kentucky, you’ll also need to register the LLC there. You can either form a California LLC and then form a Kentucky LLC (owned by the California LLC). And then title the property in the Kentucky LLC name. Or you can form an LLC in California and register it as a Foreign LLC in Kentucky. 2.) Yes, you can set up a California LLC for trading. I’m not sure of the pros and cons as trading is not an industry we’re familiar with. You’ll likely end up paying the same amount in taxes since the LLC – in its default tax classification – will be a pass-through tax entity. However, the pro/con questions could be ran by an attorney and/or accountant. Hope that helps.

      reply
  30. Gerri July 13, 2018

    Hi Matt,

    I’d like to setup an LLC – to be owned by my IRA.
    I live in Illinois

    I currently have a self-directed type of IRA that owns 10 assets which are essentially real-estate notes or contracts. I have purchased the sellers interest in these contract. All of these contracts are secured by real-estate that is located in Iowa. All these contracts are currently in a regular self-directed IRA.
    My intention is to move these assets into an LLC – and then have my IRA invest in the LLC. This will greatly reduce my annual custodian costs and provide increased flexibility in investing

    In the future I anticipate buying investment property in ILLINOIS, thru this same LLC. (ira)

    Question: Should the LLC be established in Illinois or Iowa.

    After reading your website, I prefer to set it up in IL, because its more straightforward, etc… but wondering if I’ll need to also register it in Iowa because these assets are Iowa-based so to speak.

    Thanks for your help.
    Gerri

    reply
    • Matt Horwitz August 12, 2018

      Hi Gerri, although the contracts/notes are secured by real property in Iowa, you’re not doing business in Iowa, so we don’t see a need to file in Iowa. If you reside in Illinois, do business there, and will purchase real estate there, seems Illinois is the state to go with. Hope that helps.

      reply
  31. AMY July 23, 2018

    Hi, I have my 2 rental properties in Las Vegas, NV but I live in California, where do I need to file my LLC? Can I include my husband in my LLC?We are both US citizens. Thank [email protected]

    reply
    • Matt Horwitz August 13, 2018

      Hi Amy, yes, you can include your husband in the LLC (also see qualified joint venture LLC). The corporate laws and tax laws about doing business in California are strict so you may need to form an LLC in California and then register it as a Foreign LLC in Nevada or you may want to form a California LLC and then form a Nevada LLC where the Member (owner) is the California LLC. I recommend running it by a few accountants and attorneys as there isn’t a clear black and white answer. Either way, you’ll need to title the property into the LLC that is either formed in Nevada or qualified as a Foreign LLC to do business there. Hope that helps.

      reply
  32. Joanna July 23, 2018

    Hi Matt,

    I am not a US citizen. I want to start an LLC in Nevada, using https://physicaladdress.com/pricing/ service which gives me address and registered agent service. I will run my company from my laptop, clients will be mainly from US, but can be from all over the world. Profits from access to my app I want to get through business paypal account. I plan to live in NYC on tourist visa for the next 5 months.

    Please kindly let me know if:

    1. Starting an LLC in Nevada is a good idea in my case ( main reason for picking Nevada is the $400 cost/year and no taxes)

    2. Is living in US on tourist visa, while i run a business is not a problem. I understand I can’t be on a payroll on tourist visa, but as an owner I wouldn’t be.

    3. Is the fact that the LLC is registered in Nevada and I will be residing in NYC is not a problem. On many forums, this included I read that it is best to open LLC where u reside, but I am not creating and selling goods nor hiring employees. My business doesn’t require me to do anything tother that making sure servers are up and responding to emails if costumers have any questions or concerns.

    Thank You for any advice you could provide.

    reply
    • Matt Horwitz August 17, 2018

      Hey Joanna, #3: Since you’re a non-US resident and you’re just here temporarily (and you don’t have an office or employees), you don’t have to form the LLC where you are temporarily visiting. That rule applies to US citizens/residents who are “doing business” where they reside. So you don’t have to form the LLC in New York. However, you may want to consider opening an LLC where you will be since it’ll make opening a bank account a heck of a lot easier. If you form an LLC in Nevada, you’ll need to fly there to open a bank account or register your Nevada LLC as a Foreign LLC in New York. Please check out our bank article for foreigners (opening an LLC bank account in the U.S.) and make a few phone calls to banks before deciding on the state where you form your LLC.

      #2: We’re not sure since we don’t get into the details regarding visas and immigration. We recommend doing more research and/or calling an immigration attorney to check.

      #1: The Nevada state taxes won’t apply. Nevada Corporate taxes only apply to a Corporation (or an LLC taxed as a Corporation). And $350 per year ($150 Nevada LLC Annual List + $200 State Business License renewal) is more expensive when compared to other states’ LLC annual fees. However, I think more importantly (and as mentioned in #3), the ease of opening the LLC bank business account will be more important than comparing annual fees of different states.

      Hope that helps! And let me know if you have any new findings or follow-up questions.

      reply
  33. Hassan July 25, 2018

    hi , i live in pakistan and want to establish a LLC in US for leather business and crowd funding for new products .please tell me which state would be the best for the complete online virtual business operations in US from my home country Pakistan

    reply
  34. Nathan July 25, 2018

    Hi Matt, I provide IT services and my home state and the place I am doing most of my business is Ohio, but I also have a few clients and 2 employees in North Carolina. Should I also file for LLC in NC or can I get away (for cheaper) with Just having an LLC in Ohio?

    reply
    • Matt Horwitz August 13, 2018

      Hi Nathan, in this case, you’re doing business in both states. For that reason, it’s best to form an LLC in Ohio and then register your Ohio LLC as a Foreign LLC in North Carolina. Hope that helps!

      reply
      • Nathan August 13, 2018

        Yes, that’s what I was debating between so this helps a lot! Thanks you so much for your help, and thanks for putting together such a great, in depth, and straightforward website!

        reply
        • Matt Horwitz August 16, 2018

          You’re very welcome :) Thank you for your awesome comment, Nathan!

          reply
  35. Dennis Williams July 29, 2018

    I have a registered LLC in Pennsylvania. I’m moving to South Carolina, how do I transfer my LLC to my new place of residency?

    reply
    • Matt Horwitz August 14, 2018

      Hi Dennis, there are usually 3 ways to move an LLC:

      1. Dissolve the old LLC and form a new LLC. This is usually the cleanest (record-wise), however, you’ll need a new EIN and new bank account opened in the new state.

      2. File a Foreign LLC qualification (allows existing LLC to do business in the new state). You can use the same EIN and bank account, however, this can be expensive since you’re maintaining 2 LLC filings (note: it’s still one LLC though). You have the cost of the Foreign LLC Registration/Qualification, Registered Agent fees in both states (if applicable), and Annual Reports in both states (if applicable). Note: you may not have these fees in PA though since you may still have an address you can use as the Registered Office and PA LLC don’t have Annual Reports.

      3. Redomesticate (sometimes called “conversion” or merger”) old LLC from current jurisdiction (old state) to new jurisdiction (new state). You can keep the EIN and the bank account, but the filing may be more complicated.

      However, South Carolina doesn’t allow for redomestication of LLCs (only Corporations), so you’ll need to choose option #1 or #2 above.

      HOWEVERSenate Bill 189 (see “Section 33-43-1013”) is working its way into law and if passed, this will amend the South Carolina LLC Act and allow domestication of out-of-state LLCs. So if you are not in a rush, you may be able to exercise option #3 at some point in the near future.

      reply
  36. Linda July 31, 2018

    Hi Matt, my husband and I wish to create an LLC in either Oregon or Washington state (we maintain two houses and travel frequently between these two states). Besides annual fees/initial filing where WA probably edges out a little, we would like to know the tax advantage comparison between these two states. WA has the notorious B&O tax with sales tax, and OR has state income tax though no sales tax. Business is mainly online business. Can we get some advice from you? Also, will forming an S-corp or C-corp help with benefiting tax purpose?

    reply
    • Matt Horwitz August 15, 2018

      Hi Linda, we don’t get as deep into taxes as LLC formation, so this is a conversation that you’ll need to have with an accountant regarding Oregon LLC vs Washington LLC. It’s likely that an LLC taxed as a C-Corp won’t offer tax advantages, but an LLC taxed as an S-Corp will offer tax savings on self-employment tax, but that’ll really only be worth it once the LLC’s net income can justify the added expenses (like accounting + payroll). Also, if the LLC is formed in Washington, check out our article on the qualified joint venture LLC (for husband + wife LLCs in community property states) where the LLC can elect taxation as a Sole Proprietorship instead of a Partnership. Hope that helps!

      reply
  37. Lisa July 31, 2018

    Hi Matt,
    Thanks for the great info. We are looking for anonymity and registering in a state that does not fully disclose the ownership structure. In this case, is Wyoming a better option to form a LLC, given this primary motivation?

    reply
    • Matt Horwitz August 15, 2018

      Hi Lisa, Wyoming will work for this, as well as a handful of other states. You just need to review the Articles of Organization (or equivalent document) and Annual Report filings to see if Members need to be disclosed. However, you’ll need to take it a step further and consider a Parent/Child LLC setup. For example, forming an LLC in Wyoming and then that LLC owns an LLC formed in the state where you reside or are doing business. This offers privacy, stronger liability protection, and takes care of having the LLC registered where you’re doing business. You’ll also need to consider – for privacy reasons – which addresses need to be listed in both the Parent LLC and the Child LLC (Registered Agent address, main/principal address, mailing address, etc.) as well as how the Articles of Organization (or equivalent document) is signed by the LLC Organizer. If you want to use a filing company and a registered agent for privacy, we recommend using Northwest Registered Agent ($39 + state fee). Their packages are built for privacy: they’ll sign as the Organizer, serve as the Registered Agent, and they’ll allow you to use their office address throughout your LLC filing. Any mail that is sent to your LLC will be scanned by them and uploaded to your online account. Hope that helps! Let me know if you have any follow-up questions.

      reply
      • Josh November 2, 2018

        Our primary concern is also privacy – Florida appears to make quite a bit of information public record where it appears Wyoming may not… The businesses money will be made in FL but we have considered WY and other states for privacy reasons…

        Sounds like we are on the right track with registering domestically in WY and as a foreign entity in FL. We would use a registered agent in WY because we don’t reside there as well as a registered agent in FL on behalf of the WY LLC.

        After reading through comments, I wonder, is it possible to register domestically in FL using a registered agent and still maintain anonymity?

        Thanks in advance and for this resource.

        reply
        • Matt Horwitz November 22, 2018

          Hi Josh, you could form a Domestic LLC in Wyoming and then register as a Foreign LLC in Florida. You could also form a Wyoming LLC and then form a Florida LLC that is owned by the Wyoming LLC (Parent/Child LLC). Another thing to note, the Cover Letter (for both Domestic and Foreign LLC filings in Florida) is not required. Double-check this, but you can likely get the anonymity you’re looking for in Florida with just a Domestic LLC filing. Hire a filing company (so they sign as Organizer). Hire a Commercial Registered Agent. List the Manager as one of your other LLCs (or another business entity). Make sure to hire someone to file your Annual Report each year too, since those are made publicly available on the Sunbiz entity search. Northwest Registered Agent can take care of all the above. Regardless of who you hire to form your LLC, make sure you get a Resolution or Statement of Organizer. This shows the Organizer stepping down and appointing the Members (or Managers). That along with your Operating Agreement will prove ownership. Hope that helps!

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  38. Johan V August 1, 2018

    Hi Matt,

    (great website!)

    Question: Can I obtain an EIN without having an SSN?

    I am a non-US citizen and a non-US resident, and planning to form an LLC for my US business. As I don’t need a physical presence in the US for my operations there I understand that I can select any state for the LLC. But to open a bank account and I do need an EIN. But is it correct that I require an SSN for that (which I have not) ?

    Thanks, Johan

    reply
    • Matt Horwitz August 15, 2018

      Hey Johan, correct, as a non-US resident you can pick any state you’d like. However, if you’re visiting the U.S. to open an LLC bank account, you’ll want to consider a state that is easy for you to travel to. Please see our article on opening a bank account: non-US resident opening a U.S. bank account for LLC.

      As for a social security number (SSN), you don’t need one in order to get an EIN for your LLC. We have instructions here: how to get EIN without SSN. Make sure to only apply for an EIN after your LLC is approved.

      As for not needing any physical presence in the U.S., that is partially correct. You don’t need to be physically present, however, you will still need a Registered Agent address and a main/principal office address as well as a mailing address sometimes (note: they can all be the same U.S. address). The Registered Agent will usually serve as your LLC’s main point of contact with the Secretary of State. If you need to hire a Registered Agent, we recommend Northwest Registered Agent ($125 per year). They’ll serve as your LLC’s Registered Agent and they allow you to use their office address throughout your LLC filing. Any mail that is sent to your LLC will be scanned by them and uploaded to your online account. Hope that helps!

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  39. John August 1, 2018

    Currently, I live in MD but in December I will move to PA and live there permanently. I conduct online business there not selling or collecting taxes there. I want to register LLC in PA but don’t want to file for out-of-state LLC in MD and pay double fees. What are my best options? Thank you.

    reply
    • Matt Horwitz August 15, 2018

      Hi John, instead of forming an LLC in Maryland and then later filing as a Foreign LLC in Pennsylvania or filing a conversion/domestication (converting a Maryland LLC to a Pennsylvania LLC), you should be fine just forming the LLC in Pennsylvania now since you’ll be moving there soon. Hope that helps. Let me know if you have any follow-up questions.

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  40. khaled August 5, 2018

    i read the article and i totally understand that i have to form a LLC in the state i live in . before reading the article i was thinking to register in NM because the names of the owners and officers are not public . how do i for an Nevada LLC and hide the names of LLC officers/managers ? because they are public in Nevada . can i form a NM LLC to be the officer of the NV LLC? . would that be a problem when obtaining EIN or opening a bank account . if not what is the best set up to hide the officers/ managers name in Nevada ? thank you

    reply
    • Matt Horwitz August 15, 2018

      Hey Khaled, if you reside or do business in Nevada, then yes, a setup where your New Mexico LLC is the LLC Manager for your Nevada LLC will work well. Check out my reply to Lisa (it’s a few up from this) – it goes over things to consider when privacy is your aim. You shouldn’t have issues opening an LLC bank account since your Nevada LLC’s Operating Agreement will show the New Mexico LLC as the Manager, but you as the Member (I just emailed you a manager-managed Operating Agreement template). And if the bank is curious as to who owns the New Mexico LLC, just bring your New Mexico LLC’s Operating Agreement. You could also have your New Mexico LLC own your Nevada LLC (instead of just being the Manager). Either way, since both entities are separate legal entities, they should each have their own bank account and EIN Number. Hope that helps!

      reply

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