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what is the best state to form an llc in watch this video and find out hey i'm quran from life accounting the number one firm for financial education do me a favor go ahead and like this video for me so others can find it on youtube and subscribe for the best financial content you can find okay let's jump right into it to truly answer the question what is the best day to form an llc we actually need to answer two questions the first question is literally what is the best state to form an llc in but the second question is what is the best state for you to form an llc you'd be surprised that those are two different questions that actually have two different answers let's talk about it starting with the first question what is the best state to form an llc well there are three places in the united states that are known to be the best state to form an llc in and all three have their own appeal starting with the first and most popular choice delaware and for good reason delaware has very low registration fees and franchise taxes also delaware does not tax out-of-state income meaning delaware llcs who do no business in delaware or a non-significant amount of business in delaware can see enormous tax savings delaware also has something called a chancery court you see a chancery court is a court that only handles business cases so business disputes are handled much quicker than other parts of the country and the judges are extremely knowledgeable about business law i mean that's all they do making delaware one of the most business friendly states for llcs now the second best state to form an llc in is nevada yes home to viva las vegas nevada has no state income taxes no taxes on business profits no corporate taxes no taxes on capital gains and no franchise taxes additionally unlike some states nevada does not require llcs to hold annual meetings or have an operating agreement to remain compliant though i fully recommend that you have an operating agreement for your llc even if your state does not require it now nevada also bakes privacy into their llc benefit as they don't require you to disclose the owner of the llc when forming one and does not share formal information with the irs making nevada a great place to have privacy as an llc but an even better place to save on taxes as an individual and llc business owner but if your main goal is privacy the best place to form an llc is actually number three on the list and that's wyoming yup wyoming is quickly becoming more and more popular as people think about asset protection so what makes wyoming so great for privacy and asset protection well wyoming is the only state that allows for what is known as a lifetime proxy which allows you to control the llc through someone else who owns a membership interest meaning the managers and the members of the llc do not have to disclose who they are but can still control the llc additionally wyoming is one of the few states that offer liability protection for single member llcs and as a little cherry on top for wyoming llcs wyoming also has no business income or franchise taxes by the way while we're talking about starting at llc be sure to check out our free training where we show you how to start a six figure business with only 250 i've done it and i'm happy to show you how to do it as well and that free training link in the description okay back to the video so now that you know the three best places to form an llc let's answer the second question where exactly should you form your llc and the answer is actually quite simple for most people you should form your llc where you live aka your home state now there are three exceptions that i'll go over in just a second but once again for most people you should form your llc where you live so quran you're telling me i shouldn't form my llc in nevada delaware or wyoming if i don't live there yep that's exactly what i'm saying for example if you live in california i know the registration fees are simply outrageous but you should form your llc in california here's why if you register your llc outside of your home state but still meet the qualifications for doing business in your home state well you will have to register as a foreign llc in your home state meaning you will have to register in both states so not only will you pay registration fees in both states you may also have to pay annual reporting fees in both states and maintain both llc's which can get quite expensive and if you form your llc in another state to take advantage of low or non-existent business taxes well think again because you pay taxes where you conduct business and not where your llc is formed meaning if you do not conduct business in a state where you formed your business you will simply end up paying taxes based on your home state's laws this concept applies to online businesses as well so when does it make sense to form an llc in another state if you don't live there well here are the three scenarios where it makes sense if you want to remain anonymous you will want to form an llc in wyoming or nevada and have the wyoming or nevada llc own the llc that is registered in your home state once again in those two places you do not have to disclose who owns the llc now if you're in real estate you want to form an llc where the investment is located as all business for the property will be conducted in that state and lastly if you are not a us resident but own a business in the united states you should likely form an llc in wyoming as it has the most foreigner friendly laws well there you have it the best day to form an llc if you found this video helpful do me a favor and hit that like button for me it helps others to find this video on youtube and subscribe to the channel for more financial information that helps you save on taxes and create more profit in your business also be sure to check out the free training from life accounting where we show you how to start a six-figure business with only two hundred and fifty dollars once again it's free and you can find the link in the description below
Thanks for your comment Sandee Brickhouse, have a nice day.
- Johnnie Ziad, Staff Member
there is so much hype online about where to open your llc and while it is i guess it is a big decision for most of my clients it doesn't make that big of a difference when you go to any of the hyped up states and let me explain first let's take a step back for u s residents and people who live in the united states you should probably just register an llc in the state where you live and do business this will be cheaper for you in the long run and easier and easier to comply with local regulations that's fine so i got that out of the way if you end up if you're based in the us and you're in florida but you want a delaware company it's fine it'll work but you need better reasons than just to pay no taxes because it doesn't really work like that you still have to pay florida taxes because you live and do business in florida so that said most of my clients and the people i work with are non-residents and they'll say things like um there's the big the big four i guess delaware wyoming nevada and new mexico are the most popular ones that i see i don't see that many nevada to be honest with you it's mostly delaware wyoming and new mexico and i'll talk about some differences between these what i like the most and what you should consider when you're opening a company so first of all all of these options will maintain the privacy of the owner they don't see who the owner is and you generally have an attorney or third party opening the company on your behalf so the state won't even know who you are and that's the same for all of these options every option in basically every state requires a registered agent and that's nothing new you have to usually you pay for that and usually it's the same across all the states the filing fees for opening these companies are a little bit different nevada's a little bit higher delaware's i think a little lower but the renewal cost is a little more uh and then wyoming and new mexico are the cheapest wyoming actually has a renewal that you have to do every year where you have to pay you have to pay the state to um to renew the company and keep it in legal status which is about hundred and fifty dollars whereas new mexico doesn't have this delaware is a three hundred dollar annual renewal so it's a little bit more expensive so apart from that from a tax standpoint they're all exactly the same you can open a florida llc a new york llc a delaware llc a california llc and as a non-resident with no u.s trade or business you still won't pay taxes in the u.s so there's no benefit of this state or that state in that instance for a u.s corporation uh i would generally use delaware or wyoming because they don't have corporate taxes uh the same way that other states do whereas if you had a florida corporation you're paying i think 4.5 percent don't quote me on that i didn't i didn't research it you're paying something you can't you're paying income taxes on your profit pending the there's also a 50 000 exception in florida so if you're using an llc like i said you're non-resident with no u.s source income new mexico is a fine choice wyoming is a good choice and so is delaware again i don't like nevada as much a little more expensive the the pro with new mexico is a little cheaper in the long run um but i for most of my clients use wyoming and this is the the biggest reason i use wyoming for the llc's that i open there's two reasons first it's a little bit cheaper that's fine it's not the most important thing um the second thing i like about wyoming llc is over delaware and i'm not going to comment much on new mexico because i haven't opened very many new mexico companies it's generally uh wyoming because i just like the way their back office works i like the um the way the speed in which they issue the documents and i like the way that they're set up and structured another thing that i like the reason i don't usually go with delaware is because at this point delaware is on the blacklist of certain countries for example i believe in brazil it's a it's a tax haven delaware's wyoming isn't so it's kind of interesting that they have the same tax impacts but one is a blacklisted and the other one isn't so it's right now wyoming is less is more is less infamous to me than delaware is delaware is like this big corporate tax haven uh thing that a lot of uh people look at it like when when reality wyoming has the same exact tax impacts so i mean i'm giving you insights into how i look at it and what it what's what i usually do however the truth is and the most important thing is that the income tax differences don't really matter and the there's no differences in the sales taxes generally and then also um the fees are pretty similar in doing this as well so with an llc it really doesn't matter i usually pick wyoming new mexico is a fine choice so is delaware so is nevada florida is fine it's not private you can look up who the owner is but really from a tax standpoint it doesn't matter if you don't have nothing to hide then there's no reason that you wouldn't want a florida company instead you know it doesn't matter that much so my point for this video is to just start already open the company and get rolling and see what you can do with to see if you can make some money when we're talking about a corporation which i don't know that's not really the whole point of this video it's going to be first where you're doing business is where you would want to open the company second would be in either a state with no income taxes like delaware or wyoming and then third thing you want to consider is the is the governance and the corporate governance most major companies use delaware because of the uh how do you say they're how the the the laws that have been passed and the and the precedent that has been set uh in terms as the uh of like publicly traded companies and the rules for ownership and all those different things it has more historical um private industry favored laws which have been supported by the president and are easy to cite going forward i'm not an attorney so i don't know that much about that stuff and i haven't dealt with any clients that have specifically had the pre previous legal code and legal decisions cited that happened in delaware so i don't have a lot of experience with that but that is something that if you have a huge company you would want to consider and hopefully if you have a huge company you're not using videos on the internet to make your decisions you're probably seeking a proper legal counsel so i hope this video was helpful i hope it cut through a lot of the bs that's out there and that you're able to use it to more quickly and efficiently start your us business and find all the success that you deserve i hope that you enjoyed the video like and subscribe and i'll see you on the next one thanks
Thanks Eve your participation is very much appreciated
- Johnnie Ziad
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I've studied cosmic-ray astronomy at American Baptist College in Nashville and I am an expert in balkan history. I usually feel blissful. My previous job was private sector executives I held this position for 10 years, I love talking about frisbee and trampolining. Huge fan of Kesha I practice athletics and collect paper currency.
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