A common misconception is that you can only file the paperwork for forming a limited liability company (LLC) in the state where you live, but you can actually choose to form an LLC in any state.
Where you file makes a difference when starting a business, so make sure you know what potential advantages are available to help your company succeed.
Swyft has helped thousands of businesses with the filing process and we’ve used our expertise to compile this list of the best states to form an LLC. Learn about the benefits of starting an LLC in certain states and make the choice that works best for your future plans.
Domestic LLC vs Foreign LLC
A Domestic LLC is formed when you file in the state where you reside, also known as your “home state.” However, you can also choose to file outside of your home state, which creates a Foreign LLC.
For example, a newly-created furniture business may file as a Domestic LLC if they plan to only serve local customers at a physical location. However, the business could also choose to file as a Foreign LLC in a different state if they plan to sell their furniture online and want to take advantage of a lower tax rate or other incentives.
It’s important to note that “filing” differs from “registering.” Filing refers to the process of forming a business, whereas registering is an additional process business go through to operate in additional states. A Domestic LLC only needs to file in the home state, whereas a Foreign LLC will file in one state and then register in others (including the actual home state).
Think about how you plan to grow your business when filing and choose a state that will offer the most advantages for your long-term goals.
1. File an LLC in Your Home State
Creating a Domestic LLC by filing in your home state may be appealing for several reasons. Depending on your home state, it may actually be cheaper to file locally rather than filing in another state and coming back to register as a Foreign LLC in your home state. Having to go through this process twice also means double the paperwork and additional fees compared to filing in a single state as a Domestic LLC.
Additionally, you may already have familiarity with government offices and laws specific to your state. Contact the business filing experts at Swyft for more information about your state filing fees.
2. File an LLC in Delaware
Delaware is the most popular state to file an LLC in because it has a strong reputation for being business-friendly and offers a fast filing process with increased protection for owners. The filing fee is just $90 for an LLC which is on the low end, although the annual report costs $300 which is considerably more than other top states.
Delaware is well respected among entrepreneurs because it uses a separate court called the Chancery Court to handle business matters. The Chancery Court is made up of judges that are experienced in business affairs which helps to expedite cases. The additional business experience among judges also helps ensure fair outcomes, which is why Delaware consistently ranks near the top of lawsuit fairness surveys.
Legal fairness is essential to the thriving state, which also offers many protections to help business owners and shareholders against creditors in the instance of a member being sued or the company going bankrupt.
3. File an LLC in Wyoming
Wyoming offers low fees and great tax benefits for people looking to start an LLC. The initial filing fee is only $100 and the annual report cost is just $50. Wyoming also offers a business-friendly tax structure with no corporate or personal income taxes and the strongest asset protection laws in the nation.
You’ll find the Wyoming regulatory environment is a lot more flexible compared to other states that have a lot of restrictions commonly known as “corporate red tape.” For example, many states require you to visit the state where you are filing, but Wyoming allows everything to be handled online.
4. File an LLC in Nevada
Nevada features exceptional tax benefits for aspiring entrepreneurs because there are no corporate income, personal income, or franchise taxes. Nevada also doesn’t require you to create an operating agreement or hold annual meetings, which helps prevent roadblocks in the future.
With regards to protections, Nevada’s LLC Act aims to mimic the renowned protections available in Wyoming. Unlike many states, Nevada does not have an information-sharing agreement with the IRS. This means business owners receive greater privacy because they aren’t required to share identifying information with the government.
While Nevada has many benefits, it’s important to note that annual fees have been increasing over the past several years. As of 2019, the filing fee is $425 and the annual costs are $350 per year.
Think about what matters most to you before deciding which state to file in, or contact our business specialists for information and guidance.
Get help forming an LLC today
Swyft is experienced in LLC formation and will automate the filing process so you can focus on what you’re passionate about rather than paperwork. Our team will keep you informed so you can understand what’s going on and feel confident in your decision to partner with Swyft.
To make things easier, we’ve broken down our comprehensive filing process into five simple steps:
- A thorough review of the information you provide.
- An in-depth check of the availability of your business name.
- Document filing and approval notification.
- State approval document forwarding.
- Reliable compliance support.
Learn how you can incorporate your business in 10 minutes or less with our affordable packages starting at just $49. Talk to Swyft to skip the confusing legal paperwork and get help forming an LLC today!