What state do I form my LLC or corporation in? Can I do it anywhere?
An LLC, or Limited Liability Company, is generally formed under the State law of each State. And because the laws in each of the 50 States differ, the regulations affecting your LLC will vary.
A common misconception is that the LLC owner needs to be physically present in the State where they choose to form their LLC. Because someone lives in California, for example, they think California is the only place where they can run a business.
However, that is not the case. An individual can choose any State where they want to set up their company. There would only be some legal requirements that need to be met, such as:
- A registered agent, who will be the person in that particular State who will receive any mail, such as lawsuits and other important documents.
- Registration with the Secretary of State letting them know that they are an LLC in a different State but doing business in the State where they are residing.
Where is the best State to set up an LLC?
If a person looking to set up a company resides in California, lawyers recommend that they reconsider their options.
Nevada and Delaware are more viable options because they have better protective laws for an LLC or corporation owner.
In California, a single LLC owner is more liable in terms of people coming after their personal assets because of the charging order statutes and exceptions present. In Nevada, Delaware, and some other States, there are laws that offer more protection for the owner, so it becomes more difficult for someone to sue the company, get a judgment, and go after the owner’s personal assets.
So in truth, an individual has a wide range of options when it comes to where to form their LLC or corporation. They just need to be smart about it and consider the laws that govern LLCs in each particular State they are considering.