Typically, new business owners must register as an LLC in every state in which they’re conducting business. But what about online companies who would like to register as an LLC? When it comes to filing requirements, online companies have significantly more flexibility when it comes to choosing the state in which to register.
Instead of being required to file in one particular state, business owners can select the best state to form an LLC for online business. However, with more than 50 options to choose from, this could seem overwhelming for many first-time business owners. Fortunately, this post will detail options for the best state to form an LLC for online business.
A Business Owner’s Home State
From a sheer convenience perspective, business owners may find that the best state to form an LLC for online business is their home state. LLC owners may find it easier to submit necessary paperwork in their home state because they are familiar with the state’s filing methods and requirements. Additionally, it may be easier for new business owners to secure a registered agent who they can trust since they’ll be more familiar with people in the area.
However, business owners should also be cautious of the fact that filing in their home state may not be the cheapest option. Fees and taxes vary significantly from one state to another. Since online businesses have much more flexibility as to where they can file, business owners could end up saving a significant amount of money by choosing to register in another state. They could perhaps select one of the best states to form an LLC for online business listed below.
Wyoming is quickly becoming the best state to form an LLC for online business. That is because the state does not require companies to pay business income or franchise taxes. Additionally, the state allows “lifetime proxies” for business members. Lifetime proxies allow individuals to vote on company matters privately through a person who holds shares in the business.
Delaware has long been considered one of the best states to form an LLC for online business. The state does not levy taxes on out-of-state income. This means that even though a company may not conduct much business in Delaware, they will not see a spike in their taxes. Additionally, Delaware is friendly to LLCs because there are no initial filing fees, and franchise taxes are low. Lastly, Delaware is unique because of its Chancery Court system. This system, only in Delaware, allows businesses to settle disputes very quickly.
Nevada is another excellent choice for those looking to create a business online. The state is very business-friendly, as it does not levy taxes on
- Business Income
- Capital Gains
Furthermore, the state does not have franchise taxes. It’s also easy for LLCs to comply with Nevada law because the state does not require operating agreements or annual meetings. Many online owners also take advantage of the fact that Nevada does not share information with the IRS, allowing them to remain anonymous.
If their business allows them to do so, entrepreneurs would be wise to reap the benefits of registering as an LLC in one of the states outlined above.