Home » Delaware LLC » Why You Shouldn’t Form an LLC in Delaware

Last updated July 29, 2021

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6 Reasons Why You Shouldn’t
Form an LLC in Delaware

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6 Reasons Why You Shouldn’t Form an LLC in Delaware (for U.S. residents)

Video Transcript:

Hey folks, Matt Horwitz, LLCUniversity.com. Six reasons why you should not form an LLC in Delaware. I just got finished writing this and figured it would be an excellent piece to make a video on, and we get so many phone calls. This is such a pain point for so many people, and they make a lot of mistakes here. Note if you live in Delaware or you do business in Delaware, this information does not apply to you, you should form an LLC in Delaware. If you don’t live in Delaware and you don’t do business in Delaware, and you’ve heard that you should form an LLC in this magical state, let me save you a lot of money and headaches. Don’t form an LLC in Delaware. The disadvantages of forming an LLC in Delaware far outweigh the perceived advantages. Let’s look at an example. Nathan is from Connecticut. He reads online that Delaware is the best state to form an LLC in, so he forms an LLC in Delaware. He’s a resident of Connecticut, he already pays taxes in Connecticut, and his home office is based in Connecticut. Most people aren’t aware of, but there’s a lot of issues with this setup, illegally transacting business without authority. Nathan’s Delaware LLC is doing business illegally in Connecticut. The Connecticut secretary of state is going to enforce it’s laws and will soon be sending Nathan a citation in the mail with a fine, so he needs to register as a Foreign LLC. To remedy the citation and because it’s the law, Nathan must now- It’s hard to read your own writing. Nathan must now register his Delaware LLC as a Foreign LLC in Connecticut. He needs to file a Connecticut Foreign LLC registration, pay the state filing fee, which is $120 in Connecticut, it’s a lot more expensive in other states. Then he must keep this Foreign LLC in compliance with Connecticut law. That means filing an annual report every year and paying that fee, as well as paying a Connecticut business entity tax of $250 every other year. Remember, this is already on top of him paying the $90 registration fee in Delaware, the $300 required annual franchise tax in Delaware, and $125 every year for his Delaware registered agent. In short, Nathan now needs to maintain two LLCs. He has a Domestic LLC in Delaware and a Foreign LLC in Connecticut, and it gets worse. Nathan was deceived into forming a Delaware LLC because he read it was a tax friendly state, and while this is true, it really only applies to large, multi-million dollar companies and not small business LLCs. Look, don’t just take our word for it. Read what the Delaware secretary of state has to say about the hype … I guess you can’t click the link, but the link is below the video. Most people are unaware of this simple fact, taxes are paid where the money is made, not where your LLC is set up. That means Nathan still owes Connecticut taxes, which could include but aren’t limited to sales and use tax, business entity tax, withholding tax, corporate business tax, net income tax, franchise tax, property tax, and more. Remember, Nathan’s a resident of Connecticut and an LLC is a pass through entity, which means the profits of the LLC are reported on his federal income tax return, as well as his Connecticut personal income tax return. In short, the whole reason that he formed the Delaware LLC in the first place is defeated. It’s not saving him any money on taxes. In fact, this whole loophole is unknowingly costing him a lot more money. What about the Delaware Court of Chancery and Delaware Law? I’m sure you’ve read online something about these. The Delaware Court of Chancery is the oldest and most established business court in America, and Delaware has the most robust business case law. Who cares? What are you starting, some lawsuit rampant company where you’re going to go to court every other month? Look, take your reality check. Not that this information is not true, it just doesn’t apply to you. Again, take a reality check. Most of the companies promoting Delaware, they don’t give a crap about your business’s long term success and well being, and all the headaches that you’re going to have to deal with. They just want your money. Don’t be misled into the headaches. Focus your energy on running a legitimate and successful company in the state where you actually live and do business in. Whew… alright, I get a little angry here. Other industry related issues. Again, we get painful phone calls from our readers about these issues. Recently, a guy from Pennsylvania running a trucking company in Pennsylvania formed an LLC in Delaware. Later, he tried to register his trucks as being in Delaware with the department of transportation. They denied his application because he was not a resident of Delaware, and that ended up costing him $20,000 of business that month. I’m not going to list out dozens and dozens of examples here, but I just want to let you know. This information, you’re not going to find on websites promoting Delaware, and you’re probably going to hit industry specific quirks where you’re going to have issues with your out of state LLC. All right, take away. Instead of forming an LLC out of state and then later learning that you need to register your out of state LLC as a Foreign LLC in your home state, paying for an extra registered agent, paying annual reports in two states, having tax liabilities potentially in two states, and dealing with the headaches of two LLCs, just form the LLC in the home state and the state where you’re doing business. If you’d like more information on this whole topic, we have another video, link below. Here’s an excuse I hear, “But I work online!” Even if you run a business from home or online, you’re still a resident of your home state and you’re still transacting business in that state. You can’t get around your state’s tax obligations simply by forming an LLC out of state. If you really want to, you’ve got to move. Again, put your time and energy into building a successful company, not wasting your time on a handful of loopholes you’ve read on the internet. Again, if you live in Delaware or you do business in Delaware, just please disregard this, form an LLC in Delaware. If not, form your LLC in your home state and/or the state where you’re transacting business. Hope this information is helpful. Take care.

Note: If you live in Delaware, or do business in the state, then this information does not apply to you. You should form an LLC in Delaware.

If you don’t live in, or do business in Delaware, and you’ve heard that you should form an LLC in Delaware, let me save you a lot of money and headaches: you should not form an LLC in Delaware.

The disadvantages of forming an LLC in Delaware far outweigh any “advantages” you may have read.

Let’s look at an example:

  • Nathan is from Connecticut
  • He read online “Delaware is the best state to form an LLC”
  • He forms an LLC in Delaware
  • He is a resident of Connecticut
  • He already pays taxes in Connecticut
  • His home office is in Connecticut

Most people are unaware, but there are a handful of issues with this setup…

Illegally Transacting Business Without Authority

Nathan’s DE LLC is doing business illegally in CT. The CT Secretary of State enforces its laws and will soon be sending Nathan a citation and a fine in the mail.

Needing to Register a Foreign LLC

To remedy the above citation (and because it’s the law), Nathan must now register his DE LLC as a “Foreign LLC” in CT.

He first needs to file a Connecticut Foreign LLC Registration and pay the state filing fee ($120). He must then keep his Foreign LLC in compliance with CT law. That means filing a Connecticut Annual Report every year ($20), as well as paying the Business Entity Tax ($250) every other year.

Remember, this is on top of already paying the $90 filing fee in Delaware, the $300 required Annual Franchise Tax in Delaware, and the $125 annual fee for his DE Registered Agent.

In short, Nathan now needs to maintain 2 LLCs. A “Domestic LLC” in Delaware and a “Foreign LLC” in his home state of Connecticut.

It gets worse…

Taxes Are Paid Where Money is Made

Nathan was deceived into forming an LLC in Delaware because he read it was a “tax-friendly state”.

And while this is true, it really only applies to large, multi-million dollar Corporations, not small business LLCs.

And don’t just take our word for it. Read what the Delaware Secretary of State has to say about the hype: http://corplaw.delaware.gov/facts-and-myths/

Most people are unaware of this one simple fact: taxes are paid where the money is made.

That means Nathan still owes Connecticut taxes, which could include (but are not limited to) sales and use tax, business entity tax, withholding tax, corporate business tax, net income tax, surtax, franchise tax, property tax, and more.

And remember, Nathan is a resident of Connecticut. And an LLC is a pass-through entity. Which means the profits from his LLC are reported on his federal income tax return, as well as his Connecticut personal income tax return.

In short, the whole reason he formed the DE LLC is defeated. It’s not saving him any money on taxes. In fact, this whole “loophole” is unknowingly costing him a lot more money.

But What About the Delaware Court of Chancery and Delaware Law?

I’m sure you’ve read something along these lines: “The Delaware Court of Chancery is the oldest and most established business court in America,” and “Delaware has the most robust business case law.”

Who cares!

What are you starting: some lawsuit-rampant company where you’re going to court every other month?

Take a reality check. Most of these companies promoting Delaware don’t give a crap about your business’s long-term success and well-being. They just want your money.

Don’t be misled into the headaches. Focus your energy on running a legitimate and successful company in the state where you actually live and do business.

Other Industry-Related Issues

We get painful phone calls from many of our readers about these issues. Recently a man from Pennsylvania who runs a trucking company (in PA) formed an LLC in Delaware.

Later, when he tried to register his trucks with the Department of Transportation, they denied his application because he was not a resident of Delaware. This ended up costing him over $20,000 in business that month.

Instead of listing out dozens of other examples, we just want to warn you that you’ll likely hit industry-specific “quirks” with LLCs registered outside the state where you reside and/or actually do business.

Takeaway

Instead of:

– forming an LLC out-of-state and then later learning that you need to register your out-of-state LLC as a Foreign LLC in your home state,

– paying for an extra Registered Agent,

– paying annual reports in 2 states,

– having tax liabilities in 2 states,

– and dealing with the headaches of maintaining 2 LLCs,

just form your LLC in your home state, or the state where you are doing business. If you’d like more information on why it’s best to form an LLC in your home state, please see this video.

“But I Work Online!”

Even if you run an online business from home, you are still a resident of your home state and you are still transacting business in that state. You cannot get around your state’s tax obligations simply by forming an LLC out-of-state.

Put your time and energy into building a successful company, not wasting your time on a handful of “loopholes” you read on the internet.

If you live in, or do business in Delaware

Then this article does not apply to your situation. You should form your LLC in Delaware. Get step-by-step instructions on how to do that here: How to Form an LLC in Delaware.

Matt Horwitz
Founder & Educator, LLC University®
Matt Horwitz has been the leading expert on LLC education for the past decade. He founded LLC University in 2010 after realizing people needed simple and actionable instructions to start an LLC that other companies weren't offering. He's cited by Entrepreneur Magazine, Yahoo Finance, and the US Chamber of Commerce, and was featured by CNBC and InventRight.
 
Matt holds a Bachelor's Degree in business from Drexel University with a concentration in business law. He performs extensive research and analysis to convert state laws into simple instructions anyone can follow to form their LLC - all for free! Read more about Matt Horwitz and LLC University.

186 comments on “Why You Shouldn’t Form an LLC in Delaware”

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.

  1. Hello, can you help me please?

    This is my case, I’ve an enterprise of car rental by an app, we take the car wherever you want, my service are a digital service, now I’m in 8 points of mexico and I’ve 1000 cars, in our plans we have to open Los Angeles. We’re thinking to open the llc in Delaware for the fiscal benefits, if my service are digital you think that is a good idea to open there my llc ?

    Thank you for the attention

    • Hi Luis, since you are not a US resident or citizen, you can form the LLC in any state. If you were to form the LLC in DE, you’ll need to register in California since that is where you’re doing business. There are likely also tax details which you’ll need to look into, that I’m not aware about due to your situation. I recommend you speak with an accountants and an attorney to be safe.

  2. Hi, i’m non US person currently stay in singapore, and i would like to form LLC in US. at the first thought LLC in delaware is good for me to start. but after your useful article it starting make sense $300 for the registered agent fee.
    can help to advise me since now i dont know what is the direction right now. if i’m selling online buy and sell from other company/retailer and sell it using online by using marketplace like amazon. what is the best situation in which state i should form the LLC?
    other company can help to exampt the sales tax and i must include the reseller certificate. can help to advise me on this?
    if need attorney can recommend me as well? thanks in advanced.
    Agus

    • Hi Agus, Delaware and Wyoming are common for foreigner-owned online businesses. You can choose any state you want actually. Also consider if you’re going to fly to the US to open an LLC bank account. You may want to choose a state that’s easier to fly to. We don’t have any recommendations at this point for sales tax/reseller certificate. If you need to talk to an attorney, I recommend using Avvo. Hope that helps.

  3. Matt,

    Thinks for your video. I am thinking of stating an LLC for importing finished food products into the US and I am a US citizen. I am from California but currently reside in Florida. I will be in Florida for another year before moving back to California. I plan to start importing the products into Florida, but later into California when I relocate in about 12 to 14 months. Would it be wise to open an LLC in both states? Or just Florida since it is where I currently reside and where I would initially start importing/ Thanks for the assistance.

    • Hey Freddie, in this case you’ll be doing business in both states. You could first form an LLC in Florida (a domestic LLC), then later, register that Florida LLC to do business in California as what’s known as a Foreign LLC registration. This legally allows your Florida LLC to operate in the state of CA. All in all though, it’s still just one LLC. Hope that helps!

  4. Hi Matt. Thank you very much for this informative post, it’s like you were reading my mind, glad that I came across this information.

    Just one question, perhaps you can advise. I work in eCommerce and like many, I have opened my LLC in Delaware. I currently live in Romania and mostly work online selling retail products via Shopify.

    My question is simple, since my store receives purchases from all over USA, should I charge taxes for each state except the one my LLC is from?

    Hope you understand my question. Thank you!

    • Carlos, I love your comment. So happy to hear I was addressing your concerns/questions as they arose. Regarding sales tax, I’m not 100% sure and taxes are not my “strong suit” (yet). I recommend trying our “knights of the roundtable” strategy in order to get to the bottom of it. Apologies I couldn’t assist you further.

    • Hey Carlos,

      Same, I dont live in USA and I formed an llc in delaware.
      I sell productson ebay and etsy and they’re sold in all over the US.

      What are the taxes obligations and what have you found so far about the taxes?

      Let’s connect. I’ll be highly obliged to have helped on this matter. Since, I’m just starting up.

      Thanks

      • Hey Nauman, you’ll likely need to collect sales tax and file a return with the IRS. Whether or not it’s just an informational return or you also have to pay taxes will depend on the details of your business, your country’s tax treaty with the US, and other details specific to your situation. We recommend working with an accountant that specializes in non-US resident taxes. Hope that’s helpful. And yes, Carlos, if you have any updates, please feel free to share :) Thanks.

  5. Hello! Thanks for your post. I am a life coach working online and with people all over the globe… I have talked to a few other coaches who do the same type of work and they are saving money having their LLC in Deleware. Can you please tell me how it’s possible for them to be doing this and why you still don’t recommend it, especially since they are doing and saving money? I am currently living in MA but am moving to NYC Spring 2018 and will be legitimizing my business sometime between the new year and my move. Thanks!

    • Hi Rosemary, thanks for the great question. Can you elaborate on what you mean by the other coaches saving money? The answer comes down to the legal definition of “doing business” in the state where you are actually doing business. We’ll need to update this page with more context, but the best way to think about it is this… it’s not about where your customers/clients are located… it’s about where you run/operate/manage the business FROM. In your case, if you’re moving to New York (and especially if you’ll be claiming residency there), then that’s the state where you’ll be legally doing business. Yes, you could form an LLC in Delaware, but you could also be fined and requested to register your Delaware LLC as a Foreign LLC in New York… this will certainly be more expensive. So although cheaper states may seem cheaper on the onset, they could end up being more expensive, and worse, a much larger headache. Also, if your LLC isn’t registered in New York (and you’re doing business there), you don’t have the rights to file a suit in the state. Hope that helps some. Let me know if you have any followup questions.

  6. Hello Matt. I am looking to start my business while currently working for my firm. We do lending services across the country and I am interested on starting my own firm. I work in NYC, live in NJ. However, I have been leaning on registering in Delaware. What’s your take on this situation? I am also starting it with a very small budget, and with all the said “benefits” that come with DE business license, I want someone to throw a rock on me and give me guidance.

    Thank you for your article! It really opens up more options! Happy holidays!

    • Hey Darryl, do you have a state license? If so, is it from New York or New Jersey? And where would you primarily be working from running this business?

      • Hello Matt Happy Holidays! I have a license in NJ. And I might run the business in NYC.

        • Hey Darryl, I’d then consider forming the LLC where you will be operating the business, either in New York or New Jersey. You could also consider forming the LLC in Delaware and then registering as a Foreign LLC in either NY or NJ. Hope that helps. And Happy Holidays!

            • Hi Darryl, you’ll likely pay the taxes where the money is made, but we cannot offer information on taxes as things vary widely. I recommend using our “knights of the roundtable” strategy and phoning a few accountants for the best answer unique to your situation. Link here. I’d love to hear what you find out, so feel free to keep me posted.

  7. Hello! I am a US citizen who does not live in the US and I want to form an LLC for my e-commerce business this year. Is it okay for me to choose any state? I have been looking into Delaware or Wyoming mostly. Do you have to pay state income tax if you own a business in that state? I’m wondering if it’s better to form the LLC in a state with low fees that does not collect sales tax or a state that has no income tax if I would have to file a non resident return. Thanks!

    • Hi Britany, we’re unable to provide information regarding taxes as it varies far too widely. I recommend using our “knights of the roundtable” strategy (see here) and calling a few accountants to review all your options. Hope that helps.

      • If I have an LLC in NJ and want to run training /workshops via zoom nationwide, do I need to file foreign entity papers in each state where I might have attendees.

        • Hi Dana, no, you don’t have to do that. That would be crazy to manage! ;)

  8. Hi Matt,
    I am Stavroula from Greece.
    I have a professional Amazon account and I registered as individual.
    I want to form a LLC for my e-commerce business this year.
    I would like your advice to form a LLC in Delaware.
    Thank you in advance.

    • Hi Stavroula, Delaware is a great state for foreigners setting up Amazon business. We also see a lot of foreigners setting up LLCs in Wyoming for ecommerce/Amazon FBA businesses.

      • How about if it’s a US citizen living abroad wanting to do the same thing (as in opening up an amazon business online). My family is in NJ and I have the business as a sole operator based there. Should I form the llc in NJ or just do Delaware?
        Thank you

        • Hi Pippa, it’ll likely be easiest to choose the state where you’re likely to return to after your travels (if applicable). It’ll also be cheaper to form a New Jersey LLC since you can serve as your Registered Agent (or family) and the annual fee is less. Hope that helps.

  9. Hello Mr. Horwitz,
    I’m not US citizen nor living in the states.
    I have opened or. forrmed (through an agency) LLC in Delawere back in 2006 just so it can be the owner of a company (doo) in my country :-)
    In those 12 years neither the LLC nor the DOO didn’t do any revenue (It was for a project that later unfortunatlly wasn’t realized)
    My question is where can I check if the LLC is still in exsistence, because if it doesn’t than there is no “legal” owner of the DOO which could become an interesting problem in my country :-) esspecially if now I want to start work through this DOO. Thank you for your kind answer and help
    Best regards
    Igor

    • Hey Igor, the easiest thing to do is contact the Delaware Division of Corporations and ask them. Hope that helps.

  10. Hi
    What if I am not a resident of the United States at all?
    I am an Amazon seller, where do you recommend to open the LLC and why.
    Thanks

    • Hi Gilor, will you be doing business physically in any US state? Such as having an office or having employees? If not, then we see most non-US residents choosing Wyoming or Delaware. Hope that helps.

  11. Hi there,
    I am opening a vacation rental business. We are located in Mexico and all of our properties are located in Mexico. Our renters are international but mostly are American, Mexicans and Canadians. My goal is to setup a pass through account in US to have better financial tools. Most of the payments I invoice for go directly to the owners of the properties (mostly are American, Mexicans and Canadiansas well) and we keep a commission ( between 15 and 25%). Can I use this passthrough account simply as a tool to process payments and not have to pay taxes in the USA? ( Mexican merchant accounts are expensive, slow and scrutinized). Or can I send my gross profit to Mexico as Intellectual Property payment?
    Thanks

    • Hey Fish, I wish I knew the answer to this one, but I’m not sure as we don’t provide information and research on finances and taxes, especially when dealing between two countries. I recommend speaking with a few attorneys and accountants for more information. Feel free to keep us updated if you’d like. I’m curious to hear what you come up with.

      • Matt thanks for the quick reply, I will follow your advice and let you know what we find.

        • Hello Matt and hello Fish,

          I would be very interested to hear what you ended up doing. We operate under a similar business model. We are Limousine reservation website from outside the US but with US customers and transportation partners in the US. We operate as middlemen and we take a commission. We don’t execute the service and our office is not physically located in the US.

          Matt:

          1- we are planning to open the LLC in Delaware. Would you advise against that? Our founder is a US citizen but resident outside the US.

          2- Do we have to collect sales tax when we take payments from the customers?

          Thanks for your help, your website is a life saver!

          Alex

          • Hey Alex, you’re welcome! We’re not 100% sure on this situation, but it seems a Delaware LLC could work. We don’t get into the weeks regarding sales tax, so that question would need to be posed to an accountant. Thanks for your understanding.

  12. Hi Matt, I’m trying to form an LLC with two partners, 2 of us have ssn but 1 is a foreigner, Our business is in Kansas, would you recommend us to register in Kansas or Delaware. Thanks in advance!

    • Hi Sal, if you’re doing business in Kansas, you should be forming the LLC in Kansas. Whether or not the LLC Members have an SSN doesn’t matter for the state you choose. I also recommend reading the following: best state for LLC. Hope that helps.

  13. I live in CA and will be doing SEO work and affiliate marketing online. My clients will be from people living in various states. I work out of my home.
    I’m trying to figure out which state it’s best to file my LLC and was looking at Nevada (they don’t have state income tax there).
    If I file a LLC in Nevada, will I also have to file a foreign LLC in California and pay fees in both states?

    I think the confusion is the fact that I’m working online and I want to be able to assist clients within all of the 50 states.

    Do you also help people file LLCs?

    Any additional information besides the answers to my question would be appreciated.

    Thanks in advance.

    • Hi James, although you work online, you’re still legally “doing business” in California. California is extremely strict about doing business in their state, imposing annual franchise tax, and coming after you (fees, penalties, back payments, etc.) if you form an LLC in another state but don’t register as a Foreign LLC in California and pay the state. I recommend reading what is doing business in California. In your case, it doesn’t really matter where your clients are located… it’s where you’re working from that will determine the jurisdiction in which you should form your LLC. So yes, if you formed an LLC in Nevada, you’d have to register as a Foreign LLC in California, and it’ll defeat the whole purpose and cost you a lot more. Simple answer is that if you live in California, you should form an LLC in California or register as a Foreign LLC in California. Hope that helps.

  14. Hi Matt!
    Your information is very helpfull, thanks for your work.
    Can you help me? I am outside US and I work online as a developer, I’d like to open LLC in Delaware for non-resident, I am planning hire registration agent, which ones would you recommend? And else how much it can be cost including all taxes? And what about rent office, what should I do if I don’t need it?
    Thanks a lot!

    • Hi Katherine, you’re not required to rent an office in Delaware. We cannot tell you about taxes as this varies a lot, especially for non-US residents. Regarding the Registered Agent services in Delaware, we have recommendations on this page: Delaware Registered Agent. Hope that helps!

  15. I’m looking to dissolve my LLC. Let me explain the situation:
    I opened the llc to start a business with a family member (solely in my name) and things went south fast. Meaning I never conducted any business at all. I am pretty ignorant to the ways of Delaware and I’m also not to sure what I should be filing to claim losses and hopefully not have to pay the irs too much. Being that I never received income and all I did was pay out money, is there a cut and dry way to clear this all up? Thank you ahead of time.

    Regards
    Marilisa

    • Hey Marilisa, if you want to dissolve your Delaware LLC, you’ll need to get clearance from the Delaware Franchise Tax Section then file a Certificate of Cancellation. You can follow our Delaware LLC Dissolution guide. Then I recommend speaking with an accountant regarding your federal, state, and local returns. Hope that helps.

  16. Hi Matt,

    I currently own three restaurants in New York all under separate LLC’s, I am planning on opening new locations in Maryland and Georgia and having all the LLC’s owned by one LLC holding company, in this case which state is it best to register the holding company LLC in?

    Best,

    Michael

    • Hi Michael, there isn’t a simple answer to the best state for a holding company in your situation. We recommend speaking with a few lawyers to find the best course of action. Thanks for your understanding.

  17. Hi Matt,
    Can I form online llc where I don’t live, I’m a student,I live in turkey and I can’t afford the price here. I want to form it online for cheap using another country, can I do that?

    • Hi Grace, yes, you certainly can. There are no residency or citizenship requirements when forming an LLC in the USA. And in most state, you can do it all online. They only “local” thing you’ll need is a Registered Agent and an LLC bank account. The Registered Agent can be hired online though. However, in order to open an LLC bank account, you’ll need to visit the bank in person, and it’ll need to be a bank that is located in the state where you form the LLC. Hope that helps.

  18. Hi,
    I am planning on opening an LLC. I currently live in PA but planning on moving to Delaware at the end of the year. Would you recommend that I form the LLC in Delaware? Then file for a foreign LLC in PA until I move?

    • Hi Jenny, yes, this is the route we recommend. When needed, you’ll then file a Statement of Withdrawal of Foreign Registration (DSCB:15-415/417) with the PA Bureau of Corporations to cease the LLC’s activities in PA. Hope that helps.

  19. Hi-
    my husband and I formed an LLC in 2016 but we never did any business in it. We forgot the whole thing.

    Recently we received tax bill from Delaware. Is there any way we can close the LLC and reduce the tax burden? thanks

  20. Hope I read this sooner.
    $280 to register for LLC in Deleware
    $50 for registered agent
    =====================
    Decided that since I was going to get double taxed, I should just open business in CA. 5 days after registered LLC in Deleware, called to cancel.
    $200 to file for cancellation
    $5 . for certifieid copy to show that i really did cancel
    $300 for annual flat tax in Delaware
    $0 . for cancelling registered agent within short amount of time.
    $0 . closing the EIN from IRS (no cost yet… just sent the mail today; no fax or email)
    ==============
    $800+ total of cost just to open and cancel within 5 days… Complete waste of money that was + time and energy in doing all documents.

    • WOW! Talk about a costly lesson. Thanks so much for sharing the details. I think this will really help our readers. Glad you got things sorted, although it was expensive.

  21. Hi Matt. I’m hoping you can help me. I had planned to file a Delaware LLC until reading this post. I am currently starting an online marketing consulting agency. I live the majority of the year in Hawaii but spend a couple months in Georgia and 4-5 months overseas. Based on your article I feel like you would recommend filing in Hawaii since this is my home state. I am trying to avoid this because Hawaii has a GE tax. I may take on the occasional Hawaii client but my focus will be all over the US. I have another business in Georgia which is why I spend a couple months there. Would you recommend an LLC in Hawaii or do you think I can start one in Georgia? Thanks in advance.

    • Hi Jason, I understand, however, it all comes down to doing business. And if the State of Hawaii thinks you’re doing business there, you’ll still need to register your LLC there and pay taxes. Having said that though, please run this by your accountant to double-check. Thanks.

  22. I opened an LLC by mistake and never used it for anything. what if I continue ignoring the tax bill from Delaware? If they’d dissolve the llc, great! it just too expensive to pay tax and fee to close the llc

    • Hi Amy, after 3 consecutive years of non-payment of the $300 Annual Franchise Tax, the Delaware LLC enters a “cancelled void” status. The tax bill total will be 3 years ($900) plus interest and penalties. The LLC will still remain in existence, so that leaves it open to other potential obligations and debts, however, if no business was ever (or ever will be) done, there shouldn’t be much risk. While it is best to dissolve the DE LLC, if you abandon the LLC instead, the taxes become a debt owed to the State of Delaware against your LLC… not against you as an individual. If you look at section 18-1107(n) (Taxation of Limited Liability Companies), it states LLC Members are not liable for the LLC’s debts. As an FYI, if you ever wanted to use the LLC in the future, you would need to file a Certificate of Revival ($200) and pay the back taxes, interest, and penalties. However, in your case, it would just make more sense to form a new LLC. I’m just writing this bit in case others are in a similar situation. Hope that helps!

  23. I’m a US Citizen and planning to start an online software selling and software consulting services business with my foreign partner (who is not in USA). We are going to provide our services in the entire world. I currently live in California. Can you please guide me which is the best business structure to get incorporated and in which state?

    • Hi Vinnie, California has very strict laws regarding doing business, both corporate law, and tax law. So, just by residing in California, you’re likely doing business there. I would recommend forming the LLC in California. You’ll also want to speak with an accountant after the LLC is formed to make sure you and your partner take care of all required tax filings with the California Franchise Tax Board. For LLC versus other entities, please see here: LLC vs Corporation. Hope that helps.

  24. Hi Matt,

    Great information. My wife & I have an online business and are considering starting an LLC. We have our residence in Florida but we live full-time in Europe. We’re debating whether to open the LLC in Florida or abroad. We would like to do it in Florida in case we move back to the US. But we’re not sure if there are any legal issues operating an online LLC in Florida while living overseas. Would you know anything about this? Thanks in advance.

    • Hi Wes, there are no legal issues with running a Florida LLC from overseas. There are no residency requirements to forming an LLC in the U.S. In your situation, you’ll just want to make sure you’re working with a good accountant and filing properly with the IRS, that’s all. Hope that helps :)

  25. Hi Matt,
    I live in Bahrain and have company owning few coffee shops here. I want to establish similar coffee business (Roastery and coffee shops) in New York. Shall I incorporate New York company directly under my Bahraini company or set up a new company in Delaware which will own New York. This New York company will be basically an Operative Company. I am not US Citizen.
    Will appreciate your advise. Thanks in advance.

    • Hi Imran, you can do either one. Regarding the pros and cons, that’s too complex for us to get involved with. You’ll need to speak with – and/or hire – a professional who can get into more details with you and discuss the best path forward. Hope that helps and thank you for your understanding.

  26. Hi Matt,
    Im an owner operator in the commercial trucking business pulling goods to all 48 states , reside in California, planning to open my own LLC with authority granted by FMCSA, but i dont want to file with California ,
    quite expensive (800$ franchise, and as a owner have to pay twice myself and for LLC income + state, federal ,city ect…)

    You mentioned in your video PA resident and DE LLC got in troubles.
    I want to open in NC but i leave in California if i will use my friend address to file LLC,IRP,FMCSA he leaves in NC , open bank acc in NC…it will be consider as a domestic company or it will be foreign?
    And what exactly the registered agent does can i hire one and use there address for the same purpose ?
    THX

    • Hi Oscar, that would be a domestic North Carolina LLC. Yes, you can hire a Registered Agent like Northwest Registered Agent, which will serve as the LLC’s Registered Agent and they’ll let you use their address for all address fields in your North Carolina LLC’s Articles of Organization. As far as what a Registered Agent does, we’ve written about that here: North Carolina Registered Agent. I would run this by a few professionals though as California has strict laws (corporate laws + tax laws) regarding “doing business” in the state. We have more info that here: LLC doing business in California. Hope that helps.

  27. Hi, I’ve been asked to help a friend set up an LLc for a software business. Initially, for a trial with the first client, the income will be modest. But if the trial goes well, there could be a significant payoff. The work and most clients are in DC which has a high tax rate. Of course my friend, like most people, first thought of Delaware as the best place to incorporate. Your thoughts?

    • Hey Lauren, it’s best to set the LLC up in the state where the owner is doing business. If they don’t have a storefront, retail shop, warehouse, employees staffed somewhere, etc., then they are doing business from their home. In that case, whichever state they live. Taxes would be paid in that state anyway. Hope that helps.

  28. One of the big benefits you often read about Delaware LLCs is that you can protect your personal identity. Is this doable in any other states?

    • Hey NG, yes, this is doable in a lot of states. You’ll just need to examine the Articles of Organization (or Certificate of Organization or Certificate of Formation) and the Annual Report (if applicable) and see what items are required. You could also form a Delaware LLC and have it own your home state LLC. This way if LLC Members are required to be listed in your home state’s Articles of Organization (or equivalent document), it’ll show the Delaware LLC’s name (not yours). Hope that helps.

  29. Hi Matt,

    I have a production company in Los Angeles. I will be shooting a low-budget, independent film in NY once financing is raised. It’s been suggested that I open an LLC for this production in Delaware or Nevada. Since I won’t be making money in NY – just shooting the film – could it still cause the problems you’re talking about? Looking forward to your response. Thanks!

  30. For investment firm would it be best to open in LLC in Delaware? What would be best option since the sole business purpose is investing in startup / private equity. The partner/members are not living in same state nor in Delaware.

    • Hi Sunny, it’ll likely be best to set up the LLC in the state where it’s doing business. If no offices, then that’ll be where the Member(s) are working from. Hope that helps.

  31. I’m a Florida (FL) resident. I have formed a FL LLC to launch my internet-based social media affiliate marketing firm. FL offers no privacy for LLC members, managers and registered agents, but DE corporate registration does offer privacy protections, so I am considering two options: 1) to register a Delaware (DE) Foreign LLC using a DE registered agent to conduct my internet-based business out of my FL business address, or 2) to register a Delaware (DE) LLC (Foreign DE LLC or Domestic DE LLC — don’t know ???) using a DE registered agent wherein the DE LLC will be the sole member and manager of my FL LLC. Please tell me which option is better (Option 1 or Option 2) or if there is a third option I should consider. Also, with my Option 2, should my DE LLC be registered as a DE Domestic LLC or a DE Foreign LLC? Note, there is no state personal income tax in FL. Thank you.

    • Great question. I’d go with a Domestic Delaware LLC. Form that first. Hire a Registered Agent and a filing company for privacy (we recommend Northwest Registered Agent). Then form an LLC in Florida where the Member is the Delaware LLC. Hope that helps. Let me know if you have any followup questions.

  32. Hi Matt,

    What about if i do online business and Im a non resident alien, where should i form mi LLC?

  33. My daughter and family will be moving to Germany in October for a year or more. She and her husband will be residents of Germany, with work permits. She will use my CT address as her home address. She works at UMASS/Amherst and she will continue to work “remotely” on contract to them. Should she create a LLC in Massachusetts where she will be paid, or in Connecticut where her address will be? (You talked me out of creating a Delaware LLC).
    Any insight would be appreciated.
    natalie

    • Hi Natalie, because there is some ambiguity around which state your daughter will be doing business in, you can likely form an LLC in either Massachusetts or Connecticut. In that case, it may be easier to form the LLC in Connecticut since there is already an address there that can be used as the Registered Agent. And the filing fees are much more affordable in Connecticut. Hope that helps.

  34. Hi Matt,

    I want to establish a corporation in Delaware but establish my llc(s) in the state l live/doing business in and make my corporation the single member of each one. I just wanted to know will l still be taxed if the llc(s) become pass throughs being owned by the corporation thats in Delaware out of state? Also would l have to register the corporation in state if the llc(s) are owned by it and they’re in state where l’m doing business? Thanx in advance

    • Hey De’Andre, no, you won’t need to register your Corporation as a Foreign Corporation since you’re using a Parent/Child company setup. The LLCs will be Disregarded Entity LLCs, meaning the IRS “looks through them” and will tax them as a branch/division of the parent company, your Corporation. So all the tax reporting and filing requirements will flow up to your Corporation. Make sure to form the Corporation first, then list is as the Member when forming your LLCs. Hope that helps!

  35. Hi Matt. Thanks for your helpful blog. I am a Realtor working with a foreign investor. He’s not a US resident and wants to purchase real estate in Florida. I helped him set up a FL LLC (I am the registered agent), but had trouble getting an EIN number for the FL LLC from the IRS because the investor doesn’t have a SSN or an ITIN. (that’s a topic of different discussion though).
    Could he benefit from a DE LLC instead of the FL? We wouldn’t mind trashing the FL LLC as we haven’t made any transactions yet. I was advised that as a foreigner he’d benefit from no estate tax (in case of death). Thanks.

    • Hi Javier, foreigners can still get an EIN from the IRS, just not online (that requires an SSN or ITIN). They’ll just need to submit Form SS-4 instead (by fax or email) and enter “Foreign” on line 7b. We have instructions here: how to apply for an EIN without an SSN.

      As for whether a Delaware LLC would be more suitable than a Florida LLC, you’ll need to consult an accountant and/or real estate attorney in both states as we don’t go into detail regarding estate tax and other pros/cons to foreigners investing in U.S. real estate. Hope that helps and thank you for your understanding. Feel free to share your findings though, as we’re curious to learn what you come up with. Cheers!

  36. *Bump because I would love to know the answer to this. I previously registered an LLC in Delaware with the intents for it to be the holding company for future subsidiaries. I think someone reported a transaction to it creating a D&B number for it, but it hasn’t actually been used for any business. Actually, the D&B transaction is for one of the new companies I need to LLC ( I have no idea how this happened). I was residing in PA and have recently relocated to GA. I need to set up the LLC for that new company I mentioned which is an online based eCommerce business. Based on the above, it would seem that I need to file it in GA but D’Andre’s question sounds more like my original setup intentions..hopefully you see this in the next few hours as I already started the registered agent part of the setup…I do, however, need clarification on what he means by “pass through’s owned by the corporation”. Could he be referring to who actually owns the subsidiaries?

    • Hey Essence, if we understand correctly, you want to use a Parent/Subsidiary LLC setup. In that case, your soon-to-be LLC would be owned by your Delaware LLC. Since you’ll be running your eCommerce business from your home in Georgia, that’s where you’ll be doing business and that’s where the Subsidiary LLC should be set up. The technical name for a “pass through” entity owned by another company is a Disregarded Entity.

      Legally, your LLCs are separate and distinct entities, but the IRS doesn’t care about that. So in your case, for federal tax purposes, the IRS “ignores/looks through” the Georgia LLC and looks for who owns that. It’s your Delaware LLC. Then they “ignore/look through” the Delaware LLC and see who owns that. It’s you. So at the end of the day, your LLC’s tax reporting will fall onto your personal tax return. Make sure you work with an accountant to make sure things are filed properly. In your case, both of your LLCs are Disregarded Entities. Furthermore, this is assuming your LLCs will take on their default tax classification. If you elect to have either LLC taxed as a Corporation (a C-Corporation or an S-Corporation), then that will change things.

      We also recommend checking out our Tax-reporting versus Tax-paying article. Hope that helps!

  37. Matt Horwitz, Good day I hope you doing well
    after a long research regarding the LLC and the way to be legal to do business and save your self, I found your page and I’m really glad.
    so my concern is I’m about to open an online store and the suppliers in the US will do all the work for me from A to Z I just need to handle the fees and web process
    and I’m not living in the US at all, So what the best way to register for an LLC to get the EIN No. and be able to have a Bank Account to receive my fees from clients and be in the right side.

    I really appreciate what you doing.
    I hope I can get an answer to my concern.

    Thank You,
    Best Regards.

    Adam Rashid

    • Hey Adam, you can pick any state you’d like, however, we recommend “working backwards” in regards to the LLC bank account. Meaning, read non-US resident opening U.S. bank account for LLC, figure out the bank you want to go with, speak with them on the phone, then, considering other factors, select the state where you want to form your LLC. Then check out our 50 state LLC guides page, select the state, and follow the lessons. In the Registered Agent lesson we have tips about finding an address to use for the Registered Agent address, main LLC address, and mailing address (if applicable). Form the LLC and wait for it to be approved. If you don’t have an ITIN or SSN, you can still get an EIN for your LLC. We have instructions here: how to apply for EIN for LLC without SSN. Then work with an accountant to make sure you properly file your taxes. Hope that helps!

  38. Great article and common sense guidance for most businesses; however, what about pass throughs (LLCs & S Corps) for those who (1) live in states that don’t recognize pass throughs and (2) have no revenue derived from their home state? This is not uncommon for IT companies. Key issue seems to be what one’s state of residence considers “doing business.”

    We have a unique situation – we live in DC, have a DE domestic S corp (registered as a DC foreign corp), but all of our customers are in Asia. According to DC code we aren’t “doing business” in DC because zero revenue derived from the state and we’re a foreign entity. Note that DC is quite specific that a foreign entity with sales people in DC but selling only to those outside DC aren’t “doing business.” But because DC doesn’t recognize S corps filing a DC corp return exposes us to DC corp tax (30% higher than if income was reported on personal return). In this situation can we just file a federal S return for the corp and report the income on our DC personal return and not file a DC corp return? Any insight you can provide would be greatly appreciated.

    • Hey Paul, thank you. And man, excellent question! I hear you on D.C. being a pain as they don’t recognize the S-Corp election, but instead, treat the S-Corp as a C-Corp for District taxes. Your question is beyond our scope though and we recommend speaking to a few accountants. I’m curious to hear any findings if you’d like to share. Thanks for understanding.

      • Thanks for your reply, Matt. Good news is no need to file corp returns or pay corp taxes in DC provided we are not “doing business” there. Went directly to DC Audit and received confirmation from two of their accountants. DC has a list of activities (available on their website) that do no constitute doing business such as having bank accounts, employees, meetings, soliciting sales/executing contracts for customers outside DC, etc. Net impact for us is we report and pay taxes on all income derived from the business on our personal return rather than on a higher rate corp return. So in addition to a lower tax rate the basis is lower as we can apply our personal deductions to get a lower taxable AGI. And because we also aren’t “doing business” in Del we only pay annual Del franchise tax, no corp tax on revenue.

        Granted, we’re an unusual case as most enterprises have activity in either the state where they’re incorporated or physically located but this does serve as a lesson; double check the advice of accountants as our previous firm (big one) and current shop (mid size) insisted we needed to file DC corp as we had been doing for years. Only after reading the regs and calling the city did we get an accurate ruling. We also discovered both firms had incorrectly applied the sales apportionment factor (% of sales in state vs out of state) for all past returns.

        As a tech startup carrying huge losses initially (and thus little or zero tax liability) we only started scrutinizing the matter recently when the tax bill became stratospheric. And we were able to file for a refund of corp taxes paid for prior years (personal returns were not affected because personal deductions put us way below any state tax liability).

        Again, the lesson to all is don’t instinctively rely blindly on advice from accountants and lawyers as it can be expensively wrong. Also, check their work such as sales apportionment factor (if your state/jurisdiction has it) especially if you have significant out of state customers. Don’t just sign and send returns prepared by your accountants; crawl through every. single. line. It’s your money, not theirs.

        Most important, do your research such as via LLC University ;) Seriously Matt, the guidance you provide dispelling the oft repeated “set up a Delaware LLC!!” recommendations from so many accountants and lawyers is invaluable. In our case setting up a Del Corp years ago ultimately proved to be the right move but only because of our very unique situation and until now we had not fully utilized it. We were actually in the process of terminating our Del corp registration when we decided to take one last look and good thing we did.

        Regardless, I would agree that the vast majority of businesses located outside of Del do not need or a Del LLC or corp, completely unnecessary. But if you’re in a state that doesn’t recognize pass throughs and you have no domestic (in state) activity/customers then our approach may work for you. But please call your state/local tax authorities to confirm.

        Thanks again Matt for providing such a valuable resource.

  39. Hello Matt, I see you are giving some great advice and I would like to know what you think of my situation.

    My father is a US Resident, soon will be holding a green card. I currently live in EU and am running a business but am paying very high tax rates.

    If my father were to open the LLC in the US and hire me as an employee from the EU, could I continue to work and pay my own personal income tax in my EU Country, but the LLC in the US pay the US tax rates on all of the business revenue?

    Is this even legal?

    Best Regards,
    John

    • Hey John, this is a great question, but we’re not sure as it’s beyond our scope. We recommend speaking with a few international accountants. Did you find anything else out in the meantime?

  40. Hi Matt,

    This information is very helpful! I reside in Delaware and will be doing business in DE, NY, and possibly NJ and PA. I will partner with a relative, but she resides in Florida. Will forming an LLC in DE where I reside be problematic for my relative?

    Also, is it okay if we have clients in other states?

    Thank you in advance for your time.
    Kay R.

    • Hi Kay, no, forming the LLC in Delaware will not be problematic for your relative in Florida. If you guys end up doing business in Florida – as in the other states – then you’ll want to register your Delaware LLC as a Foreign LLC in those states. And yes, you can have clients in any/all states. Where the LLC is doing business more so comes down to where you are running operations from, not where your clients are. Hope that helps.

      • Kay, check FL definitions for “doing business.” While I agree with Matt to a certain extent, we learned in DC that many business activities (having bank accounts, conducting sales/admin activity for customers outside DC, having employees, having meetings, etc.) do not qualify as doing business in the state thus no biz registration or tax filing requirements. For many states the key trigger is whether you have customers in the state, are selling/offering services to residents of the state (via retail front or reps), and/or have state derived revenue. Further, your FL relative owning part of your business does not on its own create nexus for corp state tax or registration purposes.

        If your FL relative is working from home and you have no customers or revenue generated from FL then you may not meet the definition of FL “doing business.” Check with your state’s tax or audit agency to confirm – http://floridarevenue.com/taxes/taxesfees/Pages/corporate.aspx – good luck.

        • Hey Paul, thanks for chiming in! I agree. I think in Kay’s case, most business will be done in Delaware and not Florida, therefore, a Florida Foreign LLC qualification is likely not necessary. Kay, if your Delaware LLC is legally doing business in NY, NJ, and PA, you’ll want to qualify/register as a Foreign LLC in those states. Also, you’ll likely have state tax filing obligations if income is derived from those jurisdictions. A competent accountant should be able to assist with that.

  41. Hi Matt,

    I live in DE and have rental property in NJ. Can I just create a domestic NJ LLC and use my DE home address as the business address, or would I need to create a domestic DE LLC and register as a foreign NJ LLC?

    • Hi Ed, if you form a Domestic NJ LLC, your Main Business Address (aka Principal Office Address) can be a Delaware address, but your Registered Agent address must be in New Jersey. You don’t have to form a Domestic DE LLC and register it as a Foreign NJ LLC. You can just form a Domestic NJ LLC if you’d like since that’s where you’re doing business. Hope that helps.

  42. Hi Matt,

    First of all awesome job for writing this and to help everyone!!!
    Here is my situation, i am in the planning phase of opening up an LLC in GA for marketing, my llc will make money on selling US based cable companies services. Although all the marketing services will be outsourced from a company based in india. So main expenses will be to pay to indian based company for providing call center/marketing services.
    I want to know what kind of llc should i open to separate taxes from my personal taxes, also any advice to save on taxes will be much appreciated.

    Thanks a lot in advance.
    -Kamran

    • Hey Kamran, you’re very welcome! And thank you :) Although marketing services will be outsourced, you’ll still be running your LLC and doing business in Georgia, so a Georgia LLC is the way to go. Check out our article about how are LLCs taxed. If your net income begins approaching $70,000 per year (more or less), you can begin looking into having your LLC taxed as an S-Corp. Hope that helps.

  43. Hi Matt, thanks a lot for your post. I have a question about this.

    I’m not a US resident or citizen but 3 or 4 times per year i do online business (eg. design, edition, photography retouching) for NYC based companies. Since I’m thinking about expanding my business they recommended me opening an LCC in Delaware for this purposes. Are they correct or is there another option?

    thanks in advance
    c

    • Hi Carlos, as a non-US resident/citizen, you can pick any state you’d like, however, we recommend “working backwards” and figuring where you want to open a bank account for your LLC (it’ll need to be opened in person in the state where the LLC is formed) and figuring out what documentation and addresses they want. We have more information here: US LLC bank account for foreigners. Hope that helps.

  44. Hi Matt,

    Great article and thanks for all the tips. I wasn’t able to see if my particular situation applied to any stated above. I’m a US citizen currently working abroad for an undetermined amount of years and want to form an LLC for an online Amazon business in the states. My last place of residence was Virginia which is impossible to abandon so I am considered a VA resident when it comes to paying state taxes. Does this mean I should form my LLC in Virginia even though I’m not actually “doing” work or have a physical presence there? Would it be ok to form it in Delaware, Nevada or Wyoming?

    Thanks for the advice,

    Eric

    • Hi Eric, this falls into the gray zone. Not sure what the best course of action is. Why not just form the LLC in Virginia? What is your reason to go out of state? The Virginia Annual Registration Fee is $50/year. Delaware is $300. Nevada is $350 (not to mention $425 to form). Wyoming is $60. Virginia also has charging order protection.

      • I have a similar situation except that I already have a Virginia single member LLC for online business. Most of my clients are out of state. I do not have employees in Virginia either. Will transfering my LLC to Delaware or Nevada help with tax savings?
        Thank you.

        • Hi Jules, it’s best to discuss details with an accountant. Based on what you said, you’re still transacting business in Virginia (you’re there, running you’re business from there). So even if you formed an LLC out of state, you’d end up apportioning your income back to Virginia and paying income taxes there. In addition to needing to register your out-of-state LLC as a foreign LLC in Virginia. Hope that helps.

  45. Hi Matt,
    I am a permanent resident of US and plan to start an LLC for online software marketing and networking which will be used throughout the world. Currently I am between projects so I have been moving around staying in different states in an apartment lease. Eventually i pay my taxes based on the number of months i have been in each state. Do you think it makes sense to register the LLC in Delaware and have a registered agent in this scenario? Once i decide on a permanent project in a state, can i then transfer the LLC to that state?

    Thanks,
    AD

    • Hey AD, this falls into somewhat of a gray zone. When you say “move” an LLC, you’re likely desiring to redomesticate, however, not all states allow this. It might be worth considering where you will ultimately make your state of residency and then forming an LLC there. Hope that helps.

  46. Hi Matt,

    I am a non-US resident from the UK and it looks like I may have fallen in the trap of registering my business as an LLC in Delaware even though my business will not be operating there at all.

    My business is essentially an online business providing musicians for events which are in California and so I assume that even though I am a non-resident and the business has no employees, the business is still being carried out in California by contracting musicians to play. Does this mean that the LLC would need to file for foreign qualification in California?

    If this is the case, do you recommend dissolving the Delaware LLC and start ing afresh in California, saving future double payments and general headaches?

    Thank you so much!

    • Hi Sophie, this was originally written for those considered US persons for tax purposes, however, if your LLC is actually doing business in California, then you may want to consider forming a California LLC (California tax will likely need to be filed, even as a non-resident) and dissolving your Delaware LLC. However, this falls in the “gray zone”, so it might actually be best to speak to a few attorneys and a few accountants to get a better idea of the best course of action. Hope that’s helpful.

  47. Hey Matt,

    This thread has been super helpful. Thank you!

    I have a logistical question: I’m based out of RI. I currently consult about 4x a year for an institution in MA and have been filing as 1099 income (I have a full time job in RI separate from consulting). An addition and more lucrative consulting opportunity has come along (also based in MA) that has me thinking that I should form an LLC for protection should there be any issues with either place. I don’t have issues with paying the taxes, etc. But if I LLC in RI, my home state, do I have to file as foreign LLC in MA? (both locations are expensive)

    • Hi Tiffany, you’re very welcome! You’ll want to run this by an attorney and discuss if what you’re doing is “doing business” or if it is isolated transactions. If you’re doing business in Massachusetts, then you’ll want to consider forming your LLC there or forming your LLC in Rhode Island and registering as a Foreign LLC in Massachusetts. Hope that helps.

  48. Thank you for your useful information. I have 2 partners and we’re setting up an LLC, but all of us live in different states. We thought setting up in Delaware was a good solution. Any suggestions since at least 3 states would be involved anyway?

    • Hey D, it comes down to where the LLC is transacting business. That’s what should established where it’s formed. If if you form in Delaware, that is also what would establish where a foreign LLC filing would take place. Hope that helps.

  49. Hey Matt!
    This post is amazing and your dedication to responding to questions/comments is really cool of you!

    I live in NYC as I have a corporate job here. I also own a home in Florida. My current license is a FL one, but have thought to change it. I want to starting making films and need to create an LLC. I am not sure what locations I would be shooting in (not NYC.. maybe New Jersey), but am unsure where to file my LLC. Clearly it is cheaper in FL, but I want to do whatever is right.

    Can you advise? Thank you so much!

    • Hi Stephanie, it comes down to where you’re primarily transacting business. I understand that’s a bit gray now, but that is what dictates the state and that’s what can also cause issues/headaches later as your business grows. For example, if you form a Florida LLC, but establish your business in NY or NJ, you’d then need to register your FL LLC as a foreign LLC. If you want to elect S-Corp taxation and take payroll, you’d have to register as a foreign LLC first in order to register with the state Department of Revenue (where you’re working and will pay payroll taxes). The S-Corp may not apply, but just wanted to paint some example of some headaches that could arise. Hope that helps.

  50. Hi Matt,
    Thank you for all this great information!
    I am a US person working overseas for an indefinite period of time. My last state of residence was Virginia, which I learned is very hard to abandon. I have an active single member LLC in Virginia, although the majority of clients are not from there, and there are no employees. I do not reside in Virginia so I am not physically doing work there.
    Will transfering my LLC to Delaware, Nevada, Wyoming help with saving on a state tax bill?

    • Hi Jules, just seeing this after replying to your other comment. If you’re not transacting business in Virginia, then you have more flexibility. Having said that, it’s probably still a good idea to run this by a tax attorney.

  51. Hi Matt,
    Many thanks, this thread is very helpful. I am a non US resident living in the UAE and I am considering forming an LLC in Delaware.
    I am wondering why US business bank account is required? Would it be possible to run business in Europe with a Dela are LLC with a non US business bank account?

    • Hey Valentin, you’re welcome. We’re actually not sure about that. Have you checked with the banks there? It would also be wise to speak to an accountant as there could be tax implications. Feel free to share any of your findings. Thanks.

  52. Hi Matt,
    Thank you for this helpful information.
    So lets see if i got this right:
    I am a US citizen who currently lives overseas and haven’t resided or have a permanent address in the US for over 25 years. I’m planning on starting up an eCommerce business with the intention of selling products worldwide. Been researching my options on where to register my LLC and open a bank account in order to transact on my new online venture. Now there is a possibility that i move back to the US in the next few months and live (not necessarily be a resident) in Georgia. Your recommendation would be that i form my LLC in Georgia even though my site would be selling all over the US and other countries? And even if i may only live in Georgia 4-6 consecutive months out of the year? Is that correct?
    Would really appreciate your input on such a situation.
    Thank you

    • Hi Derek, great question. It comes down to where you’re legally transacting business. That is where an LLC should be formed (or registered, if it was formed out of state). Seems your situation is a tad gray. Best practice would be to speak to an attorney or two. Feel free to share any of your findings if you’d like :) Hope that helps and thank you for your understanding.

  53. Hell, Your video and suggestions agre great.
    I am in italian citizen living in Italy and with my partner we opened up last year a LLC in Delaware. last year we closed with $0 profit and we are going to pay in the next months the annual franchise fee of $300 plus $50 registered agent fee. We do business consultancy worldwide, if we have italian clients, can we deposit their checks into a us bank account and naturally pay taxes in Delaware? Also, with US clients from other state, like NY State, we do consultancy for them, we have to sign a W9 form, can we consult them and sign the w9 with them and deposit checks into our bank account and pay taxes at the end of the year? We do not have office in ny state or other states and we do not have any employee. Thank you in advance.

    • Hi Ferdinando, you’ll want to find an accountant to speak to about this matter. There are far more details to get into and taxes aren’t always straight forward. Thank you for your understanding.

  54. Hello,
    I plan to officially launch my fitness training business this year and I currently reside in NC, however I know that in the next 8-12 months I will be moving to VA permanently. Would it be better to wait until I have my permanent address in VA to file the LLC there or go ahead and file in NC and then go through the process of transferring the LLC when I have moved?
    What are my options once I have moved to VA?
    Can I start conducting business in VA even though I incorporate the LLC in NC?
    Would I be required to transfer the LLC from NC to VA?

    • Hi Jennifer, the process of moving an LLC’s jurisdiction into Virginia is called domestication. It’s a bit more complicated than just forming an LLC. It’s worth considering just forming the LLC in Virginia since that’s where you’ll ultimately be working from and transacting business. Since you don’t have a Virginia address yet, you can hire a Registered Agent (see Virginia LLC Registered Agent) and use their address in the Articles of Organization. Then after you move you can change the address if you’d like. Hope that helps.

      • Thanks for the response. From previous research NC to VA domestication wouldn’t be available as an option because both states (the to and the from) have to accept llc domestication. VA does but NC does not. Do you know if that is true?

        • Hey Jennifer, you may be right. We don’t do a lot with conversions and domestications. I know Virginia allows them coming in, but not sure about North Carolina. There is info from the Virginia State Corporation Commission here: Foreign Limited Liability Companies (see LLC1077-PDF). I recommend calling the NC Secretary of State and the VA State Corporation Commission to dig into the details. Hope that helps.

  55. Hi,i am a non US Citizen looking to open an LLC in the USA,and i’ve been told Delaware would work well for me,i do not live in the USA either,but i will be selling throughout Amazon(e-commerce),does this still apply to me? also,do US sales taxes still apply to me when it comes to e-commerce?
    I’d appreciate your answer,thank you in advance!

  56. Thanks for sharing such useful information about why anyone shouldn’t form an LLC in Delaware.

    • Hi Laura, you’re very welcome. We’re glad it was helpful.

  57. Hi Matt,
    I have a LLC in Delaware and been paying the annual taxes and agent for over 6 years. I do not have a business or live in Delaware. I live in CA and have a rental property and would like to change the title of the CA rental property to the LLC in Delaware. is it better for me to change the rental property title to the Delaware LLC or open a LLC or Corp in CA and have the rental property under CA LLC or corp?

    • Hi Pauline, do you currently own the property in California in your own name? And do you have a mortgage? If you form a Delaware LLC that is transacting business in California (which in this case it is), you would need to register your Delaware LLC as a foreign LLC in California. In that scenario, you would need to maintain the LLC filings in both states, maintain a Registered Agent in both states, and fulfill the LLC annual requirements in both states. If you decide an California LLC is better, you can dissolve the Delaware LLC and form an LLC in California… that is though… if you have a mortgage in place, if the bank will allow for the change of title to your LLC. Hope that helps.

  58. Hi Matt!
    Thank you for the very detailed and thorough article, it has truly helped me reconsider registering my company in Delaware.
    I am in a bit of a Dilemna where I want to launch an app and I am unsure of two things 1) whether I register my company as an LLC or c-corp
    and 2) whether I should register in Delaware or Maryland(my home state).
    Most startup companies register as c-corps in Delaware for basic reasons. I am currently in a phase where I know I will not be profiting from the application for a while so I’m questioning if registering as a c-corp would be worthwhile due to the double taxation. however, I eventually would like to get funding from VC’s. I am also unsure of registering in Delaware because it is not my home state, however, because it’s a software/online-based business I don’t think I will need to file for foreign qualification. Would you recommend I register in Maryland or do the laws of Delaware’s court system seem like a better fit for my startup?
    Thank you!

    • Hi Bola! You’re very welcome! If you’re interested in heading the VC-backed funding route, a Delaware Corporation is very common. If you form a Delaware Corporation, you would need to register it as a foreign Corporation in Maryland since you’re transacting business there. Yes, it’s online, but the states don’t care about that. You are running the operations/business from Maryland. Hope that helps.

      • Matt, to follow-up on your note, in my case, similar to Bola, I am starting a SaaS MVP and bootstrapping for now. No plans to raise VC money yet. Angel investment, perhaps. In that case, with my residence in TX now, what is the path to convert from TX LLC to Delaware C-corp in future? How expensive does this get? Evaluating should we go this route and does its help save $ and hassles vs creating C-corp from the get-go.
        Thank you!

        • Hi Argo, that is known as entity conversion. It’s a bit of a complex filing and we recommend hiring an attorney. It’s not something we provide information on. An attorney will likely charge a couple thousand dollars for the conversion, possibly more, depending on the complexity of the situation. We recommend speaking with a tax attorney to see if it’s better to form a Corporation from the start or form a Texas LLC and convert that to a Delaware Corporation later. Hope that helps.

  59. Hi Matt,
    Yes the CA property is in my name and I do have a mortgage. I think it wouldn’t make sense to pay both states (CA & Delaware) annual fees if I registered the Delaware LLC as a foreign LLC. Based on your information you shared, I think it’s best if I form a LLC in CA and put the LLC CA in this property and dissolve the Delaware LLC which I paid annual $300 and $100 registered agent each year which I don’t need.

    Thanks for sharing this useful information, it’s was very helpful.

    • Hi Pauline, you’re very welcome. Do keep in mind that California LLCs have an $800 annual franchise tax due every year. And the timing of the first payment is something to keep an eye out for (make sure to avoid “back to back” payments). For more information, please see California LLC annual franchise tax.

  60. Hi Matt,

    What do I do if I already made the mistake of creating an LLC in Delaware? I created our LLC a few years ago when living in Virginia but now live in FL. The business is just my husband and I and is now just really getting off the ground. Should we dissolve the LLC in Delaware and file in FL? Thanks!

    • Hi Des, since the business is up and running and likely has EIN history, banking history, bookkeeping history, etc., I would consider one of two things. First, register the Delaware LLC as a foreign LLC in Florida. This brings your entity into compliance and allows the Delaware LLC to legally transact business in Florida. This foreign LLC registration (aka qualification) would require a Florida Registered Agent. But you can use your address if you’d like to save money. The foreign LLC would also need to file a Florida Annual Report each year. This would be the easiest. It’s the same bank account, same EIN, same everything. It’s really one LLC (a Delaware LLC) that is allowed to transact business in both Delaware and Florida. You could also convert (known as “domestication” in Florida) your Delaware LLC into a Florida LLC. And after that’s processed, dissolve the Delaware LLC. However, domestication filings are often more administratively intense and if you DIY, it could be prone to error. We always recommend working with an attorney to property file the domestication, amend the Operating Agreement, and logistically and organizationally make sure everything else is handled properly. The slight benefit to domestication is that after you dissolve the Delaware LLC, you then no longer need to maintain a Delaware Registered Agent or pay the Delaware Annual Franchise Tax. But then again, depending on the growth and revenue of the business, spending a few hundreds dollars per year to keep a Delaware LLC in compliance may not be a bit deal. Hope that helps.

    • Thanks for your quick reply – very helpful. However, although we established the LLC a few years ago we don’t have any bank accounts in the LLC name nor have we generated any income. We do have an EIN, but otherwise, it has basically sat as I waited to retire and build my micro-small yoga business.

      I was planning on waiting until we moved to FL to set up the LLC, but as you mention in your article, we read online (and in books) and heard from several friends how much easier it is to establish an LLC in Delaware, so we did! Now that I find that I will have to also file annual reports and pay fees in FL, it certainly doesn’t make sense to pay fees and file reports in two states.

      So, with these additional details, do you think we should still file as a foreign entity in FL? Is there a simple way to just correct our boo-boo in Delaware and start over in FL? :-) Thanks again!!!

      • You’re welcome Des. Okay, in this case… if there is nothing you need to retain from the Delaware LLC, you could dissolve the Delaware LLC and then form a Florida LLC (just follow the “detailed lessons” in order). And you don’t have to wait for the dissolution to process before forming an LLC in Florida. In fact, you can form the LLC in Florida first if you’d like. It’s not necessary, but if you’d like, you can cancel the EIN for the Delaware LLC. If the Delaware LLC has a bank account, you’ll want to close that account. After your Florida LLC is approved, you will want to apply for a new EIN and open a new LLC bank account. Hope that helps :)

  61. I have a Tax business in Tennessee and we don’t have state taxes only federal taxes. Can I create my LLC in Delaware since we don’t have any state taxes in Tennessee?

    • Hi Nancy, if you formed an LLC in Delaware, you would still need to register it as a foreign LLC in Tennessee since that is where the LLC is transacting business. The laws of transacting business don’t have anything to do with state taxes. Hope that helps.

  62. Hi Matt, I am not a US citizen and I don’t live in the USA. Will a Delaware LLC be beneficial for me? Apart from the annual 90$ (isn’t it?) fees, will I have to pay any taxes if I don’t do business in Delaware? Do I need to show an annual minimum profit? And, are there any complicated documents to hand in?

  63. Hi Matt,

    I’m importing an expensive restored car to the US and thinking about registering it in Delware under an LLC for tax reasons. I reside in NJ.
    Any potential pitfals with this approach?

    • Hi Mike, import/export isn’t an area we’re familiar with, so we can’t comment on this. Thank you for your understanding. The car sounds awesome!

  64. I heard there is no tax to file in DE if there is no business running from state.. unlike in other states we have to pay tax on LLC just like personal tax.. that is huge advantage

    • Hi Raghavendra, in what state do you reside and pay taxes? That is where you’ll apportion your LLC’s income and pay taxes. The fact that the LLC was formed in Delaware doesn’t affect personal state income tax. Hope that helps.

  65. Hi Matt,

    I have been reading your advice from other questions and it is very eye opening! I have a few questions so bare with me. I am in the midst of starting my own Marketing Firm online. I am part of a military family and will be moving to DC in a few months and then again to another state (maybe different Country) every 3 years. What is your advice for someone in my situation? Do I re-register my LLC in a different state every 3 years? Will that affect my company name every time I move states?

    In regards to my company, I have a name picked out but not ready to start a business yet. Is the only way to keep my business name from being taken to form a LLC or something similar? If there is a way to register my name without starting a business, any information would be wonderful.

    Last question is in the event we move out of the Country – say Japan next, would you recommend I keep my LLC in the last US state I was last stationed? Or what would your advice be if I had clients in the US?

    Thank you so much for your time Matt. Your advice is much appreciated!

    • Hi Michal, thank you for your service! What we recommend for military families is forming an LLC in a “base state”. Meaning, a state where you have the most context (i.e. family connections, driver’s license, voter’s registration, where you file state taxes, where you’d be most likely to return to, etc.). Then from there, you’d register that LLC as a foreign LLC in the states where it’s doing business. When you leave that state, you can withdraw/cancel that foreign LLC registration.

      You can file an LLC Name Reservation. This “holds” the name without needing to form the LLC. In most states, the LLC name reservation lasts for 6 months (and can be re-obtained as many times as you’d like). Most people will want to continue using their LLC even after moving overseas, especially with US clients. An exception to that would be forming a Japanese legal entity if you had a business in Japan and there were beneficial reasons to forming a Japanese entity. Hope that helps and thank you for the kind words :)

  66. Live in Texas. Will have an e-commerce biz w/ customers around the world. We are looking to maximize privacy for partners/owners. So would simply first getting the DE LLC done and then having the DE LLC entity be the sole owner of the TX foreign entity LLC be the best way to do that? So to be clear, privacy is the biggest concern, as this startup could explode and be globally known in the next year or two.

  67. I live in Maryland and plan to open two separate e-commerce businesses. A Maryland LLC will be established for each. Should I consider forming a Delaware S Corp to hold ownership in the LLC’s? What advantage would that structure provide?

    • Hi CDub, this question is best addressed with an accountant. There are a lot of details and things to unpack here. Also to clarify, you wouldn’t form an S-Corp. You actually can’t “form” an S-Corp because it is not a legal entity. An S-Corp is a tax election (aka tax classification). So you would form either a Corporation or an LLC and then that Corporation or LLC would apply for S-Corp tax treatment with the IRS. For more information, please see LLC taxed as S-Corporation. Hope that helps.

      • Hi. I appreciate the response. I actually understand how a corporation elects IRS treatment. I was being brief and that was at the expense of specificity. I’ll talk to an accountant shortly. Any hints about what I should ask so that the call/meeting is fruitful?

        • You’re welcome :) Ah, I see. I hope I didn’t come across rude or insulting. I apologize if I did. Initially, I’d make sure the costs of having an S-Corp and running payroll are justified by the net income. Generally speaking, if net income per member is over ~$80k, I personally find it justifiable. If less that say $50k-$60k, I find keeping the S-Corp in compliance and managing payroll and payroll filings are annoying and cumbersome (so a mental/energetic cost in addition to actually fees related to payroll service, bookkeeping, and tax filings). Additionally, I’d look into whether or not the Maryland subsidiary LLCs should be taxed as disregarded entities vs. QSUBs (Qualified Subchapter S Subsidiary). I’d also discuss sales tax filings and compliance. Hope that helps.

  68. Hello Matt,
    I have a question. I spoke with a lawyer on the phone who highly recommended that I open an LLC in Delaware to maintain anonymity to buy properties. The reason why he recommended Delaware is because it has a court system streamlined to deal with business matters in comparison to New Mexico (poorly functioning business court system according to lawyer) or Wyoming. My only gripe with Delaware is the $300 yearly fee. In comparison to the $50 yearly fee for New Mexico. However, I have no intent to conduct business just buy property and stay anonymous. So it is better to go to New Mexico and save $250 a year. Or pay to have an LLC in Delaware for $300? At the end of the day my main concern is remaining anonymous from people snooping for info on Google.
    Thanks

    • Hi Jen, I recommend speaking with a few other attorneys, especially those located in New Mexico. You received incomplete information. If you form an LLC in Delaware and that LLC is doing business in New Mexico, the Delaware LLC needs to register as a foreign LLC in New Mexico. Additionally, you’ll want to ask about “conflicts of law”. Your LLC is most likely to be sued in New Mexico because that is where it’s doing business. Therefore, New Mexico law is most likely to apply and not Delaware.

      Regardless of whether you form an LLC in Delaware, form an LLC in Mexico, do or don’t foreign qualify… or if you form a Delaware LLC that owns New Mexico LLCs (something to consider… however, you’ll want to contrast that with owning an LLC in your home state that owns New Mexico LLCs), they can all be done privately. Neither Delaware nor New Mexico require Members or Managers to be listed in the public filing (DE: Certificate of Formation; NM: Articles of Organization). And New Mexico LLCs don’t have an Annual Report. And the Delaware Annual Franchise tax, while an annual requirement, doesn’t publish any information about franchise tax publicly.

      You’ll want to hire a Commercial Registered Agent for your LLC(s) and hire a company to form the LLCs so they sign as the LLC Organizer and not you. Hope that helps.

  69. I was looking at a Delaware LLC until I ran across your website. I am an Internet/Software/Hosting/Ad-tech business with personal residence in NYC (of all places! Hello tax). I need and I am seeking the most confidential formation of an LLC I can achieve.

    My business model will likely transact business interstate on a regular basis. Currently, all servers and assets are in NY.

    I am not looking for confidentiality as a function of bad/illegal business practice. I just want to avoid personal exposure and access to personal information as much as possible (name/information/other).

    I also would like to file economically with reasonable reoccurring annual fees. NYC LLC will/may require a publishing cost that I hear is really high plus local tax bla bla bla!

    Maybe I should move out of NYC but where?

    • Hi DB, moving your personal state of residency is a big question. It’s not just only about personal state income tax, but what other taxes exist. What about sales tax. Do you like the weather, cost of living, proximity to friends and family, proximity to things you like, travel/transportation, and at least a dozen other things to think about ;)

      Please see our New York LLC publication requirement page. You can publish in Albany and save upwards of $1,000.

      If you form an LLC in Delaware, but are doing business in New York, the Delaware LLC will need to register as a foreign LLC in New York.

      If you are looking for privacy, both Delaware and New York do not list Members or Managers in the initial LLC filing (the Articles of Organization). However, you’ll want to hire a Commercial Registered Agent for address privacy and you’ll want to hire someone to form/register your LLC(s) so that they sign as the LLC Organizer or Authorized Person. You’ll also want to hire someone to file the New York LLC Biennial Statements (for the same reason). The Delaware LLC Franchise Tax, while an annual requirement, doesn’t go on public record. Hope that helps.

  70. Matt,
    Thanks for the reply. I have been stewing over this FOREVER and it’s roadblocking me. You’re like a business therapist. I need to be right and get as close to what I want to achieve as possible.

    I am going NY LLC based on your response.

    So to recap

    “Delaware and New York do not list Members or Managers in the initial LLC filing”
    I will hire a registered agent, who do you recommend. I need to control my annual costs.

    Who do you recommend fill the LLC Organizer role if not me.
    If it is not me, how do I establish bank accounts for the new entity if I am not on the documents? My new business will have no credit. I have seed money to establish accounts.

    Chase sucks, they fee you to death.
    Where do most startups do their banking?

    • DB, I hear you! I’ve spent months on stuff like this. I recommend using Northwest Registered Agent. They’ll serve as the Registered Agent for the LLC and they can form the LLC for you as well. They can use their address throughout the entire New York LLC Articles of Organization. Their address is in Albany, so you can use that address and publish your ads in Albany county, too. You can call Northwest before placing the order to confirm everything. That may help calm the nerves and you can go over any details.

      Regarding the LLC bank account, Northwest will provide you with an Initial Resolution, which serves the same function as a Statement of LLC Organizer (them stepping down as Organizer and listing you as Member). However, your membership is official memorialized in the New York LLC Operating Agreement. Meaning, it’s not the Initial Resolution that makes you a Member. It works like this: you make yourself a Member by deciding to be the member of a soon-to-be-formed LLC. You authorize the Organizer to file the Articles of Organization (by hiring them). Then you memorialize all this in the LLC Operating Agreement. However, bank tellers don’t know all that lol. So the Operating Agreement + Initial Resolution help ;)

      Personally, I’ve used TD Bank, Wells Fargo, Santander, and Bank of America for business banking. I have no complaints about the first three. I think BOA customer service generally isn’t great. Most banks have 2-3 “levels” of business checking accounts. We recommend just starting with the most basic. There are usually no monthly fees if you keep the minimum balance. It’s usually $500 – $1,500. You could also check out Mercury for an online bank. They don’t have fees (just some wire fees). Hope that helps :)

  71. I formed my llc for a character entertainment business in 2019 in Delaware on the advice of Corporation Service Company (which I now know is kind of a scam). We are based in North Carolina and do events in North Carolina, South Carolina, and Virginia. I’m switching and getting a more reputable registered agent and my question is what do you advise I do next? Can I move my llc to North Carolina? 80-85% of our business is in North Carolina. When I file taxes will I need to pay in South Carolina and Virginia too? We pay the normal $300 annual fee to Delaware too. I really appreciate the help. I feel like I am drowning.

    • Hey Lauren, we’ll help you sort through this LLC “clean up”. What kind of events do you do in South Carolina and Virginia? Do they occur regularly and repeatedly and is business being done there? Typically there are 3 ways to “move” an LLC, however, because of North Carolina, there are only 2 ways (domestication isn’t allowed). Do you want to retain the LLC’s history, such as keeping the EIN and the LLC’s bank account? If those are important to you, are okay with paying some extra annual fees or do you need the most affordable route possible?

  72. Thank you for the amazing articles!

    I did that mistake and now I dont know what to do. I live in Boston MA and I formed an LLC in delaware My business is purely online, all i do is sell ebooks and affiliate marketing. I will be moving to California soon but I don’t know when exactly yet. What should I do? Wait till I move to California? If I could keep my LLC in delaware that would br the best option as I move a lot.

    • Hi Sophia, you’re very welcome. If you move a lot, it is worth considering keeping your Delaware LLC and then registering it as a foreign LLC in California when you move there. Then when you leave California, withdraw that foreign LLC filing (you’ll need to file a final CA LLC tax return) and foreign qualify in the new state, and so on. Keep in mind, that each time you foreign qualify your LLC in a state, you’ll need to adhere to that state’s LLC requirements. For example, in order for your Delaware LLC to register as a foreign LLC in California, you’ll need a Registered Agent in California. You’ll also need to file a California LLC Statement of Information and pay California LLC franchise tax and file Form 568 every year. It’s best to work with an accountant on that. Hope that helps.

      • Thank you so much, Matt. You are the best. It seems to be a lot of trouble and paperwork. Do you think it’s better to close my Delaware LLC and start all over with opening/closing my company depending on the state I’m in? My business is online with very little revenue. I feel like it’s really hard for small companies to thrive with all this paperwork and legal obligations.

        • Hi Sophia, you’re very welcome. Yes, I hear you. There is a lot of paperwork and a bit to learn about. It gets easier over time. It might be less of a headache in the long run if you Dissolve a Delaware LLC. It then might be a good idea to wait until you know where you are moving to and then form the LLC once you are certain. Forming an LLC in California is something you’d only want to do if you were certain you were going to move there as the LLC annual fees are high ($800). Hope that helps. Let me know if you need anything else.

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