LLC

Question:

Where Should I Form My Limited Liability Company?

Answer:

It is not required that you incorporate your business in the state in which it operates. Small businesses just starting out will most likely choose to incorporate in the state in which they transact a majority of their business. Others will choose to take advantage of a preferred state such as Nevada. 

In deciding which state is best to incorporate in, consider:

  • A particular state's regulatory climate
  • Tax requirements
  • Need for individual privacy
  • The cost of filing fees
  • Statutory law that favors business

Why would you choose Nevada over just simply forming a Corporation in your home state? Nevada is continually ranked the number one state in which to do business and has some of the most aggressive pro-business laws in the country. Nevada incorporated over 50,000 companies last year, and 60% of those have officers and directors who live outside the state of Nevada. 

Let's take a closer look at how Nevada encourages economic growth and how you can profit from this environment. 

  • A corporate commission does not regulate Nevada. 
  • There is no requirement to disclose to the state the date appointed for the next annual meeting of stockholders for election of Directors. 
  • You do not have to disclose in your annual report the location of principal places of business  outside of Nevada. 
  • You do not have to report the transference of stock to the state. 
  • The annual filing fee is relatively low. 

If you want to take advantage of the pro-business state of Nevada, but you transact most of your business in another state, you need to qualify your Nevada company to do business in that state. This usually includes paying a small fee, which to most business owners is small potatoes compared to the benefits you get from forming your Corporation in a preferred jurisdiction.

 

Entity Comparison Chart

The following table provides a look at the LLC vs Corporation, and LLC vs S-Corporation. Tax comparisons can be found in the lower portion of the table.


C-CORPORATION

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LLC

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S-CORPORATION

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Type of
Organization

Stock, there may be different classes.

Membership interests. There may be different classes of membership. One class of stock. Which may be voting or non-voting.
Eligible Owners No restrictions. No restrictions. 100 shareholder limit. No non-individual and no non-resident alien shareholders.
Management Managed by director(s) and officer(s). Two Management Types
- Managed by Manager
- Managed by Members
Managed by director(s) and officer(s).
Allocations of Ownership None. Dividends must be paid based upon stock ownership. Permitted if the allocations have substantial economic effect. None. Income, gain, and loss pass-through to the shareholders based on the percentage of shares owned.
Liability Protection There is limited liability for shareholders, officers and directors. There is limited liability for members and managers (if applicable) There is limited liability for shareholders, officers and directors.
Duration Perpetual Dissolves at the time specified in the Operating Agreement or upon the loss of a member unless other members agree to continue. Perpetual
Transfer of Ownership Shares freely transferred. There may be restrictions under certain state laws. Shares can be transferred only to eligible S-corporation shareholders

All that we do is submitted and performed with the understanding that we are not engaged in rendering legal, accounting or other such professional service. If legal advice or other expert assistance is required, the services of a professional should be sought.

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