Delaware LLC, living in Nevada

Asked over 2 years ago - Las Vegas, NV

I am thinking about starting a software business, I am looking into incorporating a Delaware LLC for liability issues and cost to incorporate. I currently live in Las Vegas, if I form a Delaware LLC, do I need to file anything in Nevada? will I owe Nevada any taxes?

Additional information

the software will be delivered as a service, no product will be warehoused/shipped.

Attorney answers (3)

  1. James W Claflin Jr

    Contributor Level 10


    Lawyers agree

    Answered . I agree with the previous attorney's comments and wish to add that a Delaware LLC doing business in Nevada would be considered a "foreign" company in Nevada and would be required, as was described, to register with the Nevada Secretary of State and to pay the same annual fees as a local or "domestic" Nevada LLC.

    Ordinarily in the situation described in your question, it saves money to form the company in Nevada. Best wishes.

    I am happy to give my "answer" to this question, but please understand that my posting does not mean that you have... more
  2. Robert John Murillo

    Contributor Level 20


    Lawyers agree

    Answered . Unless you have owners from various states, are planning for venture capital, or otherwise have a particular business need for Delaware, it almost always makes the most sense to form your company in the state where you reside. Moreover, Nevada law is pretty favorable to businesses.

    If you do, for some unexplained reason, form in Delaware, that entity must qualify to do business in NV. So you will pay Delaware fees and registered agent and then pay once again for NV. You will pay for both annually. So, once again, unless there is a particular business rationale for using Delaware, it is just an added cost with little or no added benefit.

    Please save yourself considerable issues and expense down the road and hire a local business attorney with expertise in software businesses. It will be time and money well spent.

    This answer is for informational purposes only and is not legal advice regarding your question and does not... more
  3. Inna J Efimchik

    Contributor Level 8


    Lawyers agree

    Answered . I am assuming that the reason that you are looking at Delaware is because your "software business" is really a startup and you want to follow the typical startup path, which dictates that the company should be organized in Delaware.

    If that is indeed the case, you should make sure that an LLC is the right type of entity for you. While some angel investors like the past-through tax treatment of LLCs, which allow them to take a write-off for a startup's losses, most VCs will not invest in an LLC. It's not difficult to convert an LLC into a corporation, but it still requires the help of an attorney and will require time and money. If you are planning on raising money within a short period of time after forming the LLC, or if you are going to set up a stock option plan to provide equity compensation to employees, all of these weigh in favor of forming a corporation from the start.

    Of course, I could be off-base here. If you are not trying to go the "venture-backed startup" route, then, as the other attorneys have suggested, Delaware may not be the optimal jurisdiction for you to form your company.

Related Topics

Small business structures

When starting a small business, there are many types of business entities to choose from. Each has its own advantages and disadvantages.

Incorporating a small business

Incorporation is the act of forming a corporation, a separate legal entity whose rights and liabilities are distinct from its shareholders.

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