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Written by : Rene Lawal
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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 Janett Smolik, have a nice day.
- Rene Lawal, Staff Member
in this video we're going to talk about what's the best state to form your LLC in stick around hey guys this is Sam Malai and I'm a business lawyer for entrepreneurs in this video I'm going to talk to you about why you shouldn't form your LLC in Delaware Nevada Wyoming if you're a U.S resident and why you should form your LLC in your home state stick around to find out so this is the biggest misconception when it comes to the subject of LLCs I get emails about this all the time I read an article that Delaware is the best state I heard Nevada doesn't have any state taxes I read an article that that's saying Wyoming is the best state for LLCs this is completely BS and completely wrong for the most part I'll explain so here's the actual answer you should form your LLC in the state where you're physically located however if you're not planning to have physical presence in the U.S meaning that you will be operating solely from outside the U.S then you should form your LLC in Wyoming the best and most friendly friendly state for non-us residents but for most of you guys if you're wondering about where you should form your LLC this is the answer you should form your LLC in the state where you're physically located so if you're located in California then you want to form your LLC in California if you're based in Florida then you want to form your LLC in Florida pretty straightforward right so here's the problem if you decide to register and form your LLC outside of the states where you're physically located then you will be required to also register the out-of-state LLC as a foreign LLC in your home state for example if you form an LLC in Delaware but you don't live there then you will be required to form the LLC Delaware LLC in your home state as a foreign LLC in order to to do business in your home state so let me explain so if you're if you're in California and you decide to form your LLC in Delaware that not only will you have a Dell reality but it will also be required to register the Delaware LLC as a foreign LLC in California in order for you to do business in California this means you will end up having two llc's one in Delaware and one in your home state you also have to pay two State filing fees and you also have to pay two annual report fees this can easily add up to double the cost and double the headache since you have to maintain two LLCs which you certainly do not want to do there's another popular misconception you can also be misled to registering your LLC and other tax friendly states to take advantage of tax savings I hear this all the time hey can I form my should I form my LLC in Nevada I heard that how many income taxes the state income taxes that's not true taxes are paid where money is made and not where your LLC is registered again taxes are paid where money is made and not just where your Alice is registered if that was the case imagine if if your LLC if you're taxed on where your LLC was registered then why then everybody will end up essentially just forming the LLC in Nevada or states that doesn't have any income tax you see like that just doesn't make sense so for example if you form a Delaware LLC and your LLC is doing business in California you will still need to pay taxes in California because that's where you're making money so you can't get away around that just by forming your LLCs in another state another misconception even if you're an uh on an online based business you cannot get around your State's tax applications simply by forming your LLC out of state and I get this all the time hey Sam but I'm running an online business and it doesn't really look like I'm doing business in California because I'm doing online no still doesn't affect it it's about where you're physically doing business in that's where you should form your LLC for example if you live in California and you run your online business from home then you should have then you have a California business and you should form your LLC in California in a case where your company operates in two different states or if you have offices in two states you may register it in any of these states but you must also register to do business in the other states through a process called foreign qualification I'll talk about foreign qualification in another video I don't want to get into it it's a whole different topic for now what you need to know is simply is this if you're a US resident you should form your LLC in the state where you're physically located again if you're a U.S resident you should form your LLC in the state where you're physically located wherever you are that state that's your home state and if you're a non-us resident you should form your LLC in Wyoming I have other and so if you're non-us resident I have videos that explains this why Wyoming why Wyoming is the best state for this so comment below and let me know what state are you located in and what state you should form your LLC in if you have any questions comment below I look forward to helping you
Thanks Antonio your participation is very much appreciated
- Rene Lawal
About the author
I've studied quantitative psychology at Lyon College in Batesville and I am an expert in neurophysics. I usually feel surprised. My previous job was mental health counselor I held this position for 28 years, I love talking about rapping and ice skating. Huge fan of Freddie Mercury I practice badminton and collect comic books.
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