Once you have decided to form a legal entity, you must choose the state in which you will be incorporating or forming your LLC within. Generally, if you have a small business and are going to be conducting a substantial amount of your business in your home state, the general norm is to incorporate in your home state. Please review the information below as which state is the right choice for your new business venture.
Choosing Your State of Formation
Most people choose Delaware, Nevada or their home state. Delaware is often chosen, especially by larger companies, because it has the most developed and flexible corporate statutes in the country and is considered pro-business. Nevada has also become popular because of its lack of state corporate income tax, franchise tax and personal income tax. It also has relatively low fees.
Nevertheless, if you have a small business and are going to be conducting a substantial amount of your business in your home state, it will likely be beneficial to incorporate in that state. If you incorporate out-of-state, but do much of your business in your home state, you may have to make a filing to “qualify to do business” in the state if there is a substantial ongoing business or physical presence in the state. You may then be subject to the same fees, taxes and regulations as if you had incorporated there in the first place, and you will have paid filing fees (and, perhaps franchise taxes) to more than one state.
Read the Guide to Incorporating for more information on making the decision that is right for your business and situation.