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Whether you are just starting out or looking into expanding your geographic borders, it's a good idea to research forming an LLC in a different state. Limited Liability Companies (LLCs) are a popular choice because they are inexpensive, quick, and easy to form. You can usually curtail some of the more onerous compliance issues larger companies have to follow.
In fact, you can get your LLC off the ground and running in as little as a few hours. However, forming an LLC in a different state may require a bit more consideration and strategy. Fortunately, you don't have to do it alone. The seasoned accountants at John F. Dennehy CPA can help you make an informed decision.
Once you decide whether you would like to form your LLC in a different state, we can do the heavy lifting to make the process as simple as possible. Don't hesitate to reach out to John F. Dennehy CPA today for assistance in the process of forming an LLC in another state.
Before we really dig deep into the ins and outs of forming an LLC in a different state, let's start by looking at the two types of LLCs: foreign and domestic LLCs. Corporations and LLCs are only considered domestic in their state of formation. For instance, if you create an LLC in Delaware, it is considered "domestic" in that state. However, the same business would be considered a "foreign" LLC in any other state.
In other words, if you for an LLC in your "home state" or the state you live, it's known as a domestic LLC. Forming an LLC in a state that isn't your home state, you'll need to register this out-of-state business as a foreign LLC in the state you reside in. A practical example would be if you create an LLC in New York but would like to expand your business to New Jersey, you will need to registered your New York LLC as a foreign LLC in New Jersey.
If you choose to register your business in a different state, you will be considered a foreign LLC. Because of this, you will need to apply for a certificate of authority and pay any associated registration fees. This certificate is typically granted by the secretary of state and allows you to conduct business as a foreign LLC in the respective state.
And based on the state, you'll be required to pay any state taxes. While forming an LLC in your home state is pretty straightforward, forming an LLC in a different state can be a very complicated process.
In doing so, you will need to ensure your business complies with the laws of both states. Most importantly, you should always consider the potential for double taxation, depending on the laws of both states.
When it comes to the most ideal states for forming an LLC, not all are created equal. In fact, certain states are notoriously beneficial and welcoming to out-of-state businesses. Here are a few:
Nevada offers out-of-state LLCs several benefits, including no corporate taxes, no franchise taxes, strong business owner privacy protection, and relatively low registration fees.
Wyoming entices out-of-state LLCs with no U.S. citizenship requirements, low start-up taxes, and no state taxes.
Delaware has more than one million corporations registered within the state. With low initial filing and franchise fees, Delaware has very accommodating business entity laws and offers assistance for new business owners.
Unless you're experienced in the subject of domestic vs foreign LLCs, the terminology and process can be very confusing. Even so, if you fail to comply with any of the number of rules and regulations the penalties can be very costly. Because of this, it's always best to consult with the experienced professionals at John F. Dennehy CPA for guidance and expertise.
We offer decades of experience forming LLCs in different states, and our team of professionals will ensure all of the boxes are confidently checked. If you're looking into forming an LLC in a different state, John F. Dennehy will be with you every step of the way.
Contact John F. Dennehy CPA today for a consultation.
We at John F. Dennehy CPA are a team of certified public accountants who service clients throughout Long Island. The services that we provide are comprehensive, and we can resolve multiple accounting needs for a client.