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The Best States to Form an LLC In

 best states to form an LLC

Where are the best states to form an LLC (Limited Liability Company)?  I get asked this question all the time.  People have all heard about Delaware, Nevada, or Wyoming. They have heard that Delaware or Nevada have better privacy or protection. They want me to tell them which is best.

Years ago it was true that Delaware offered better protection.  Then Nevada followed suit.  So people expect me to tell them that one of these states is the best state.

They can’t believe it when I tell them that the best state to form an LLC in is usually their own state.

Originally Delaware had very good corporate protection. For years, it made sense to form an LLC or corporation there. The Limited Liability Company was originally conceived and formed in Wyoming, so of course thirty years ago it made sense that one of the best states was Wyoming. Nevada got on board quickly and made their company privacy and tax laws very favorable.

It didn’t take the other states very long to realize that they were losing company business to these three states. Today all of the states have passed laws that make LLC formation competitive with Delaware, Nevada and Wyoming.

The Nevada laws and other state laws are all about the same. You can’t really name any advantage to using an out of state LLC. In fact, whatever state you are doing business in will charge you all their fees, make you subject to their laws, and control what you do. So if you form an LLC in another state, it may double your cost. You pay the fees in your state as well as in the state you registered the LLC in.

This means that generally the best place to form an LLC happens to be the state where you live.

  1. Lee I live in NV and a NV LLC, I want to buy a business in AZ with about 200K in cashflow per year that is established as an AZ LLC. If my NV LLC owns 100% of the AZ LLC is this the best way to hold. I am a also researching a business in TX with current cash flow of $350K per year that would complement my business plan.

    • David,
      As long as you can keep the two LLCs separate, then it will work well. If you want to have just one LLC to manage, then you would have to merge the Arizona LLC into your Nevada LLC.

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