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As an on-line business only, what constitutes "conducting business" and where do I need to register my LLC?

Asked over 2 years ago - Washington, DC

I am considering forming an LLC. My business is completely online and I only provide information and easy access to other companies that actually do the selling of products and services. My ONLY source of revenue is in paid on-line advertising and click through rates (i.e. Connection Junction).
I)Does it matter in which state I register since my business is on-line and the pass-through tax implications of an LLC?
2) If I register in one state (say Delaware), live elsewhere (DC) and my target users are from multiple states (MD, DC, VA, etc) do I need to register as a foreign company in those states?
3) Will the location of the Registered Agent affect any of the above questions?

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Attorney answers (1)

Ronald J Cappuccio

Reputation Level 8

Answered over 2 years ago. Limited Liability Company (LLC) Lawyer in Cherry Hill, NJ.

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You have entered into the hottest area of State tax law! Each State is attempting to claim "nexus" ( a connection ) with the business and therefore try to collect registration fees, business taxes and sales taxes. The New York State Tax Department (January, 2009) claimed that any affilate program that offered commissions (such as through Commission Junction) subjected the parent company to NY State Tax jurisdiction. That is why many companies will not accept affiliates in New York.

Other States, such as New Jersey, try to tax "information services" from online businesses even if the sell out of NJ. The actual location of the business, the Registered Agent, employees and customers all play into the calculation.

Please, before you do anything, contact a good tax and business attorney to help set-up your business right!

I hope this helps!

Ron Cappuccio

http://taxesq.com

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