Best States to Start an LLC: If you are looking to start your own business, there are many factors you should consider, such as the type of industry you will be operating in, and the legal structure of the firm. In a recent article we presented the 7 most profitable businesses you could start, so be sure to check that out if you are going to start a new venture. Yet as already stated, apart from picking the right industry sector, choosing the right business type and location is also very important.
Many business owners decide to form an LLC, otherwise known as a limited liability company. The advantage of an LLC is that your personal assets will not be part of the liability of your firm, thus protecting you in case the enterprise should fail or encounter financial difficulties. If you have decided to choose this form of business over sole proprietorship or a general partnership, then there still remains the question of location. Thus, in the following list we will be looking at the best states to start an LLC, in order to make your decision easier.
Since there is no residency requirement to form an LLC, you can choose the location of your firm freely. This is very beneficial since taxes and regulations vary amongst states, generating differences within the US that give certain states the upper hand when looking to start an LLC. Although many people remain skeptical and prefer to incorporate within their home state, the absence of a legal requirement to do so opens up many possibilities. Thus, tax-free states or corporation-friendly states not only become a viable option, but even an attractive one.
So what are the best states to start an LLC? Well, after taking into account tax, cost, and jurisdictional considerations, we were able to come up with a list of the most attractive states to incorporate your business. Whether you decide to go for a domestic LLC in your home state, or a foreign LLC in another state, you should definitely bear in mind that each offers different advantages.
Nevertheless, we wish to present you our list of the three best states to start an LLC and let you decide for yourself. After all, your home state might just be on this list, making it unwise to move your business elsewhere. The following list does not present the states in any particular order. In other words, we have not created a ranking, but simply wish to present the benefits of these states, which stand out in comparison with the rest of the US when it comes to forming an LLC. Head to the next page to take a closer look at what these states have to offer.
The first item on our list is Delaware, which has a reputation as being very favorable to business. In fact, more than 50 percent of the publicly-traded firms in the US are incorporated in Delaware, and around 63 percent of Fortune 500 companies follow suit. This state especially favors LLCs due to the small filing fees that are required and the absence of corporate income taxes for foreign LLCs. So if your business is not located in Delaware, this is surely an attractive option thanks to the low franchise taxes and overall pro-business environment. In addition, the lack of residency mandates allow out-of-state business to register LLCs with no inconvenience. Finally, Delaware stands out thanks to its separate court for business matters, which not only has more than 200 years of experience settling disputes, but also has the benefit of solving cases quickly thanks to the expertise of its judges.
The next business-friendly state on our list boasts laws which favor companies and their management, making them a prime location for incorporation of LLCs. Nevada might not have a special business court like Delaware, yet their pro-business attitude in matters of disputes concerning corporations is practically a fact. This western state stands out due to the nonexistence of corporate income taxes, as well as for not having personal income or franchise taxes. In addition, Nevada does not share its information with the IRS, offering those who wish to start an LLC a high degree of confidentiality. This confidentiality even allows owners to remain unlisted in the public registration filings, thus permitting greater anonymity.
Wyoming is very similar to Nevada in terms of its business-friendly environment, with minimal reporting obligations being just the tip of the iceberg. Annual meetings can take place outside the state, and the privacy of LLC owners is championed above all else. Lifetime proxies for example are recognized by the state, and can help to further shield the identity and assets of owners, while still allowing them to exercise their voting rights. In addition, Wyoming does not burden businesses with corporate income, personal income, or franchise taxes, making it a very attractive location to start an LLC.