Expert Advice When You Need It Most
What are the advantages or disadvantages of forming an LLC in a state other than the one I am operating in?I am forming an LLC. I would like to incorporate in a state with little to no corporate income tax nor state personal income tax. Nevada, Florida, Wyoming, and Delaware fit my requirements. However, if I operate in a "foreign" state do I have to pay state corporate and income tax for the state I am operating in? If this is the case, why would anyone incorporate in Nevada or Delaware if they are just going to be taxed by the state they are operating in? Attorney answers (3)
Reputation Level 13
Answered almost 3 years ago.
Limited Liability Company (LLC) Lawyer in Alpharetta, GA.
No matter where you incorporate, you will be required to qualify in each state in which you operate. If the LLC is operating in the state of Georgia you will be required to pay applicable corporate and income taxes (depending on what you elect for the tax treatment of the LLC). Some states also have significantly higher annual corprate registration fees than Georgia. In some circumstances, a corporation may elect to incorporate in a state different from the one in which their principal place of business is located for reasons including applicability of various corporate laws (including takeover laws), licensing matters, specific tax advantages, etc. Each of these circumstances should be assessed based on the specific facts regarding the company and its business and should be discussed with professionals.
For most small businesses, the additional tax and state reporting oblgations, the additional annual fees, the risk that you may be sued in that state in which you are not incorporated and have to defend a lawsuit in that other state, often outweigh any perceived advantage. This answer and any information contained in this answer is not intended to be treated as legal advice. It is legal information. Other information and documentation important to your specific circumstances may impact the applicability of this information. This posting does not create an attorney-client relationship or privilege of any kind. This attorney is actively licensed only in the State of Georgia.
Add comment
Reputation Level 20
Answered almost 3 years ago.
Lawsuit / Dispute Attorney in Chicago, IL.
An LLC is a business form that does provide some advantages but does have some drawbacks.
In the most basic and general terms an LLC features are that its members have limited liability for the entity's debts and obligations, similar to the status of shareholders in a corporation, and its income and losses are normally passed through to the owners as if it were a partnership. Using the written documentation you have is a good place to begin. Contact a local lawyer - many may give you a free consultation for an hour - to discuss your specifics. Far too many variables exist in the short post you wrote for any further observation by me. Many Tampa attorneys have information posted here on Avvo. You might find my Legal Guide helpful "How to Choose A Lawyer For You" http://www.avvo.com/legal-guides/ugc/how-to-cho... You might find my Legal Guide helpful " What Do I Tell My Lawyer" http://www.avvo.com/legal-guides/ugc/what-do-i-... No one can know what the record is in the case because online we cannot see your documents. You need a lawyer. Check with a lawyer in your locale to discuss more of the details. Good luck to you. NOTE: This answer is made available by the lawyer for educational purposes only. By using or participating in this site you understand that there is no attorney client privilege between you and the attorney responding. This site should not be used as a substitute for competent legal advice from a licensed professional attorney with whom you have established an attorney client relationship. The law changes frequently and varies from jurisdiction to jurisdiction. The information and materials provided are general in nature, and may not apply to a specific factual or legal circumstance described in the question. 1 person marked this answer as good
Reputation Level 9
Answered almost 2 years ago.
Business Attorney in Alpharetta, GA.
The tax election made by an LLC can make a significant difference in the answer to a question such as this. For example, if the LLC has elected to be taxed as a partnership or as an S Corporation, then the LLC would not be subject to income tax in the state of Georgia, regardless of where it is organized. If the owner(s) of the LLC live within the state of Georgia, they will (in most circumstances) be subject to state income taxation, regardless of where that income originates (although if there are income taxes paid in the state where the income is earned, there is the possibility of offset or deduction.
The reason for organization in other states often has to do with issues other than taxation. In some cases it may be for the corporate laws of the state or organization. In other cases it may have to do with state privacy laws. DISCLAIMER: Please note that this response is not intended to and shall not create an attorney-client relationship with Briskin, Cross & Sanford, LLC or Byron M. G. Sanford, Esq. and are not intended to address the particular situation or circumstances identified int he question to which this response is offered. This response is not intended to serve as legal advice or counsel and is offered solely for educational purposes. Also note that I am licensed to practice law only in the state of Georgia. The information contained in this post is not intended to address any issues which may arise under the state or federal laws applicable to any state other than the state of Georgia. Related Questions1 Attorney answers: 
Asked by a user in Bristol, RI - over 2 years ago. 2 Attorney answers: 
Asked by a user in Dallas, TX - over 2 years ago. 1 Attorney answers:
Asked by a user in Cleveland, OH - over 2 years ago. |
