It’s a common myth that you need to form your limited liability company (LLC) in the state in which you live. LLCs are considered incorporated entities, which means that if you maintain them properly, a layer of separation exists between the business and the owners.
Think of an LLC as an individual over which you have full control. Like an individual, your LLC can live in whichever state benefits it the most. Sandy beaches and nice weather may be the appealing qualities of the state you choose to call home, but your LLC will benefit from other qualities, such as low taxes, privacy, and favorable laws. The state in which your LLC is formed is called its domicile.
It’s true that some states offer much better conditions for LLCs than others. If you’re lucky enough to live in a state that has low taxes and the privacy you desire, then why form out of state? Before writing off your territory in favor of one of the more popular ones, you need to do a little research. Your state may not be the best, but it may be good enough.
For instance, Montana has no sales tax and very low corporate income tax (6.75 percent), and its personal income tax is nominal as well. The state works hard to be pro-business and has created a tax structure that encourages business start-ups and growth by offering millions of dollars in tax credits to certain emerging industries and allowing a myriad of corporate deductions that many other states don’t recognize.
Although business-friendly states like Montana aren’t commonly referred to as tax havens, they do offer very amicable tax climates and corporate laws. If you live in one of these states, then the benefit of doing business close to home is hard to beat!
So before you decide to go out of state with your business venture, check out this website containing all state laws on naming requirements regarding business entities, real estate, and taxation. Enter the password onesmartdummy. Here, you can view your specific state’s laws, organized by topic.