What is the best state to create a LLC [Deep Research]

Last updated : Aug 16, 2022

Written by : Yetta Sandez

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What is the best state to own an LLC?

Delaware is the most popular state to file an LLC in because it has a strong reputation for being business-friendly and offers a fast filing process with increased protection for owners.
Wyoming offers low fees and great tax benefits for people looking to start an LLC.

Which state has the lowest LLC tax rate?

Range for individual income tax rates: None.
Average combined state and local sales tax rate: 1.76% (no state sales tax)
Effective property tax rate for homes: 1.02%
State ranking for business-friendly legal environment: 5.
LLC filing fee: $250.
LLC annual fee: $100.

Where is the best place to register my LLC?

Best Overall: ZenBusiness.
Most Affordable: Incfile.
Best for Legal Services: Rocket Lawyer.
Best for Small Business: Northwest Registered Agent.
Best for Entrepreneurs: Hashtag Legal.
Best for Online Business: LegalZoom.
Best for Real Estate Investing: Inc Authority.

Where is the cheapest place to create an LLC?

Iowa â€” LLC Filing fee: $50.
Montana â€” LLC Filing fee: $50.
Utah â€” LLC Filing fee: $70.
California â€” LLC Filing fee: $70.
Delaware â€” Filing fee: $90.
Indiana â€” Filing fee: $95.

Why do LLC form in Delaware?

Delaware is often considered one of the best states to form an LLC because it has limited fees and tax obligations. In fact, many businesses choose to form an LLC in Delaware even if they don't intend on doing business in Delaware.

Why is Wyoming an LLC?

Wyoming has many advantages over other states for building an LLC. It has no state income tax, filing and reporting costs are low, members' privacy is assured, and it has charging order protection laws.

What state is best for self employed?

Florida. Total Score: 7.03.
Texas. Total Score: 6.62.
Idaho. Total Score: 6.47.
Utah. Total Score: 6.26.
Arizona. Total Score: 6.07.
Oregon. Total Score: 6.00. Tax Climate: 4.75.
Wyoming. Total Score: 5.96. Tax Climate: 10.00.
Nevada. Total Score: 5.94. Tax Climate: 5.84.

Which state has no business tax?

Nevada, South Dakota, and Wyoming have no corporate or individual income tax (though Nevada imposes gross receipts taxes); Alaska has no individual income or state-level sales tax; Florida has no individual income tax; and New Hampshire and Montana have no sales tax.

Can I live in California and have an LLC in another state?

As a California resident, you are free to register the LLC for your online business in any state.

How much does an LLC cost?

You can file the LLC filing documents online, by mail, or in-person when visiting the local SOS office. The filing costs usually vary from $50 to $150 which is a single-time fee. If you plan to form your company in another state, then you might have to provide additional documentation and pay a higher formation fee.

Do I have to live in Wyoming to start an LLC?

You can form a Wyoming LLC even if you don't live in Wyoming. Residency in the state, or the USA, is not required to form a company. A majority of LLCs are formed by non-residents. Forming an LLC in Wyoming as a non-resident is the same process as for a resident.

Is Texas a good state to form an LLC?

Texas offers many advantages to LLCs formed in the state. Notably, its business environment and economic strength, asset protection for the members of the LLC, tax benefits, and a great deal of flexibility. If your business has a physical location in Texas, it is probably best to form your LLC in Texas.

What should I name my LLC?

Make It Legal. The most important thing when you're choosing an LLC name is to make sure it's legal.
Make It Memorable. You want your LLC name to be something people can remember.
Make It Meaningful.
Make It Original.
Make It Distinctive.
Make It Domain Name Ready.
Make It Social Media Friendly.

What kind of business can I start with an LLC?

Most types of businesses can be limited liability companies. Typically the only exception is a professional partnership, such as a law firm or doctor's office.

How much is an LLC in Texas?

The basic total cost of forming an LLC in Texas is $300. The basic total cost of registering a foreign LLC in Texas is $750. The optional costs of a certified copy of the filing document, a certificate of status, and hiring an outside registered agent could raise this total by between $85 and $535.

Do Delaware LLC pay taxes?

A. Delaware treats a single-member â€œdisregarded entityâ€ as a sole proprietorship for tax purposes. This means that the LLC itself does not pay taxes and does not have to file a return with the State of Delaware.

Is there an annual fee for an LLC in Delaware?

LLC/Partnership Tax Information All Domestic and Foreign Limited Liability Companies, Limited Partnerships, and General Partnerships formed or registered in Delaware are required to pay an annual tax of $300.00.

How much does an LLC cost in Delaware?

ðŸ’µ The cost to file a Delaware LLC is $90. You pay this when you file your LLC's certificate of formation with the Delaware Department of State.

What taxes do LLC pay in Wyoming?

Moreover, because Wyoming also doesn't have a personal income tax, LLC members generally will owe no state tax on income they earn from a Wyoming LLC. The only tax for LLCs, mentioned above, is the annual license tax of $50 or a small percentage of the value of your LLC's assets located in Wyoming.

Is Wyoming a tax haven?

JACKSON, Wyo. â€” Wyoming is living up to its reputation as a tax haven. A study from WalletHub put Wyoming solidly at the bottom of â€œtax burdenedâ€ states, or states that tax their residents most aggressively.

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Comment by Walton Rhinehardt

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 Walton Rhinehardt, have a nice day.
- Yetta Sandez, Staff Member

Comment by Melissa

hey guys i want to tell you what is the best state to form your llc in and this video i am going to provide you with information on the best day to form your loc so that you can make a good decision and stay out of irs trouble as you can imagine states are looking for taxes from residents and they're also looking for taxes from people that do not reside in their state in order to determine what's the best state to file your loc in you need to understand this concept called nexus what does nexus mean nexus means that you actually have a connection to that state and what gives you a connection to that state is really three of four basic elements the first connection to a state is the fact that you reside in that particular state this is where you have your driver's license this is where you have your residency this is where you have your address so that's the first thing that you need to consider the second thing you need to consider is do you have business ties in that state for example do you have employees that reside in that state do you have a physical address or do you own a building that you are doing business out of in that particular state that will also define some of the decision making for you the third thing you need to consider is do you own property in that state and perhaps you're located in another state so i want to break down each one of these items so you can really understand how nexus plays a very important part in your decision making when you are a resident of a state and i am going to use california as a prime example most states require its residents to file a tax return in the state in which they live there are only nine states that do not require income tax filings in those states and when you are in a state that requires income tax filing that state may have a flat tax rate or that state may have a graduated tax rate like the state of california does therefore if i am doing business as a california resident in the state of florida for example and florida does not have any state income tax and i earned say a hundred thousand dollars is that hundred thousand dollars going to be taxed in florida no because florida doesn't have state income tax however california and the other 41 states source income from all states that means i am going to pay tax on my florida income to the state of california and you're probably thinking to yourself wait what carla what are you talking about we thought florida didn't have a state income tax you are correct but because i'm a california resident and california does have a state income tax california says carla you may have earned that income in florida but because you didn't pay any tax to florida you're going to pay all the tax to california that is why as a california resident it makes sense for me to open my llc in the state of california where i actually reside that's very important what if i am a california resident and i actually am doing business in arizona arizona does have state income tax and let's say i make that same hundred thousand dollars in the state of arizona and i don't make any income in the state of california what happens then if arizona has a six percent income tax rate and california has a nine percent income tax rate i am going to have to file taxes in two states i am going to have to file in arizona where i made the money and i'm also going to have to file in california where i am a resident so in a scenario like this i need to form an llc in the state of california and i need to register my llc as a foreign entity in the state of arizona am i going to pay income taxes in both states yes i am and let me tell you how that works we're gonna have that hundred thousand dollars that i made in the state of arizona and arizona has a six percent income tax rate and california has a nine percent income tax rate i will pay arizona six percent on my hundred thousand which would be six thousand which means i would owe california nine thousand dollars however there is a little catch california will give me a foreign tax credit for the amount of tax that i pay to arizona the six thousand dollars i pay to arizona will become a credit against the nine thousand dollars that i owe california therefore i will only have to owe california three thousand dollars because i've already paid arizona six thousand dollars so when you are doing business across states it's really important for you to recognize that you will still need to open an llc in your residence state and open an llc or go foreign to the state that you're doing business in i want to take this a step further what about owning real estate in multiple states this comes up a lot where people say to me carla i own real estate in north carolina i own real estate in nevada where should i form my loc again where do you live if you live in california you form the loc in california if you live in nevada you form the loc in nevada if you live in south carolina you form the loc in south carolina but if you are a non-resident of those states and you own property there you 100 want to form an entity in the state that you live in and register it to go foreign and the states that you hold the property in now i want to give you a third example and my third example what if you are in a state that doesn't have any income taxes like tennessee and you own property in california and possibly you own property in arizona where should you form that loc well tennessee is not going to require you to file an income tax return because they are a non-taxable state therefore you are going to follow the next nexus rule that says you're going to set up your llc in a state and which you own property so in that particular case you will form your llc in the state where you hold the property and you won't need to go foreign to your residency state because your state doesn't have state income tax when you're thinking about what state to open your loc in you've got to look at the hierarchy and the hierarchy starts with number one the state that you reside in number two the state that you own property in and number three the state that you're doing business in and it's not just about the income taxes you may have to pay the other thing that you have to consider is what is irs going to say when you get audited and the first question they ask is what is your business reason for owning a business in a particular state you want to be able to answer that question with a legitimate business reason this is why i tell my clients to shy away from opening their locs in states where they don't have a nexus in states where they don't own property in states where they're not doing business in states where they're not a resident now i know there's a lot of people out there in the asset protection world that will tell you to open llc's in wyoming and delaware and i preface this with i'm not an attorney absolutely not but i deal with the irs all the time and one of my goals is to make sure that my clients business expenses are not disallowed when you open up your llc in a state where you have a nexus you're giving yourself that extra layer of protection to ensure

Thanks Melissa your participation is very much appreciated
- Yetta Sandez

About the author

Yetta Sandez

I've studied object database at Briar Cliff University in Sioux City and I am an expert in creative writing. I usually feel pleased. My previous job was medical and scientific illustrator I held this position for 31 years, I love talking about baton twirling and qigong. Huge fan of Susan Rice I practice snorkeling and collect for sports cards.

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