Starting a limited liability company (LLC) can be an exciting and rewarding decision for any business owner. However, choosing the right state to set up your LLC is crucial to the success and protection of your business. In this review article, we will explore the best states for domestic LLCs, foreign LLCs, and online businesses and provide a comparison of the better options for each type. We will also highlight states to avoid and the reasons why.
Domestic LLC
When it comes to domestic LLCs, Delaware and Nevada are often considered the best states to set up in. Delaware has a long history of being a business-friendly state and is home to many large corporations (over 67% of businesses are incorporated in Delaware). Its highly developed chancery court system and favorable tax structure for LLCs make it a top choice for businesses. Nevada also has a fair tax structure for LLCs and does not require filing annual reports or franchise taxes. It is also considered a good state of privacy, as it does not require the names of LLC members to be disclosed.
Other states that may be good options for domestic LLCs include Wyoming, Montana, and New Hampshire. These states have low or no corporate income tax and no franchise taxes for LLCs.
States to avoid domestic LLCs include California and New York due to their high corporate income taxes and franchise tax.
Foreign LLC
Foreign LLCs are LLCs set up in a state other than the one in which they do business. If you are considering setting up one, then Delaware and Nevada undoubtedly tick most of the boxes. These states have laws that make it easy for foreign LLCs to register and do business within their borders. These include no state income/corporate/franchise taxes, minimal reporting requirements for proprietors, and lifetime proxy.
Other good options for foreign LLCs include Arizona and Georgia, which have simplified registration processes and low or no state taxes.
States to avoid foreign LLCs include California and New York, as they have complex registration processes and high state taxes.
Online Business
The question of running an online business and whether it is a foreign or domestic LLC can be tricky. Your customers are all over the country, but your primary operating state is your home state. However, you are not required to register as a foreign LLC in every state. Delaware and Nevada make excellent options due to their favorable tax structures and business-friendly laws. In addition, these states have strong privacy laws, which can benefit online businesses that handle sensitive customer data.
Other good options for online businesses include Oregon and Washington, which have no sales tax and favorable privacy laws. States to avoid online businesses include states with high sales taxes, such as Illinois and Texas.
Conclusion
In conclusion, Delaware and Nevada are generally considered the best states for domestic LLCs, foreign LLCs, and online businesses due to their favorable tax structures and business-friendly laws. Other good options include Wyoming, Montana, New Hampshire, Arizona, and Georgia for domestic and foreign LLCs and Oregon and Washington for online businesses.
As much as the states discussed above may serve as an example, they do not serve as an expert business guide. Also, while a foreign LLC is attractive, the pros of a domestic LLC may save you a lot of headaches. It is advisable to consult with a lawyer, tax professionals, or any other field experts to ensure your LLC is correctly set up in compliance with applicable laws.
Why do you need to use ZenBusiness to open an LLC
ZenBusiness is a company that provides services to help businesses form and manage LLCs. Some reasons why you might want to use ZenBusiness to open an LLC include the following:
- Convenience: ZenBusiness makes the process of forming an LLC easy and convenient. Their services include filing articles of organization, obtaining an EIN, and setting up a registered agent, which can save you time and effort.
- Expertise: ZenBusiness has a team of experts who are knowledgeable about forming an LLC and can provide valuable guidance and support throughout the process.
- Affordable pricing: ZenBusiness offers competitive pricing for its services, which can be cost-effective compared to hiring a lawyer or doing everything on your own.
- Ongoing support: ZenBusiness provides ongoing support and services to help you manage and maintain your LLC. This can include assistance with annual report filing, registered agent services, and more.
Using ZenBusiness to open an LLC can be a convenient and affordable option for businesses looking to form an LLC. Their expertise and support can make the process easier and help ensure that your LLC is properly set up and managed.
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