One of the unique features of incorporating or forming an LLC is that you do not necessarily have to form the company in the State where you do business. When deciding on which state to incorporate in, there are basically 2 choices:
For the majority of small businesses, incorporating or forming an LLC in your home state is usually the easiest and least expensive option. This is because virtually every state has laws that require you to “re-register” a Delaware or Nevada company in the state where it is actually doing business.
For example, if you form a Nevada corporation but your physical business is located in Colorado, the state of Colorado will want you to “re-register” as what’s called a “foreign corporation” (a company that was not originally incorporated in Colorado). This is especially true if you intend to get a bank account and business license or rent office space in your home state.
NOTE: We can file a Foreign Qualification in any State, click here to learn more and order online.
In most cases, registering as a “foreign corporation” or LLC will subject you to all the same taxes and fees as an in-state company. So you will probably have not avoided any taxes or fees, plus there is the added expense of registering as a “foreign corporation” in your home state and any annual fees in both states.
This is not to say there are no valid reasons for choosing another State, we just like our potential clients to be aware of the additional steps required when choosing a State outside of their home State. Further discussion with your attorney or other advisor is recommended.
Delaware is where most large corporations (Fortune 500, Nasdaq, etc.) are incorporated. The reason for this is that Delaware’s body of law is more business-oriented and they have a large and advanced business court system (called the Chancery Court) to handle complex legal litigation. It is the state of choice for both large corporations, foreign corporations, and many fast-growing or high-potential companies (for example, Venture Capitalists typically require a Delaware Corporation before they’ll invest in your company).
Related Article: Read how an attorney that specializes in startups recommends setting up a Delaware Corporation.
Nevada has recently exploded in popularity for both large and small businesses. This is due to Nevada’s very pro-business climate, low-tax mentality, and the lack of an information-sharing agreement with the IRS (all other States share company information with the IRS).
Lowdown: Many times, as mentioned above, you’ll need to qualify your Nevada company in the state(s) where you have physical operations (we can assist with this). There are legitimate ways to obtain “nexus” for your company in Nevada as your primary source of operations, but we highly recommend further discussion with your attorney in this matter. We also offer a Nevada Virtual Office solution to further assist our Nevada clients.
Wyoming has also recently exploded in popularity for its very business-friendly climate and has been called “Switzerland of the Rocky Mountains” by The Economist magazine. It features some benefits compared to a Nevada entity including:
Lowdown: Though MyCompanyWorks, Inc. is headquartered in Las Vegas, Nevada, we have an office in Wyoming as well. It has lower fees, less disclosure requirements and the Wyoming Secretary of State is a pleasure to work with. We also offer a Wyoming Virtual Office solution to further assist our Wyoming clients.