4 ms·

Why not incorporate somewhere that's not CA?

awillen 6y ago
That's a good question... the last couple of LLCs that I've formed have been for businesses that are clearly operating in CA (one was for real estate here and the other for a local service company) and thus require the LLC there. Since I'm selling to the whole US here, maybe it is a better option... I will look into it.
- unstatusthequo 6y ago
  Lawyer here. Not yours. But consider Delaware or really any state. You do not need to form it in CA just because that’s where you are. Just get a registered agent and pick a state that doesn’t have oppressive LLC fees...
  - moeamaya 6y ago
    We've gone over this with our lawyers many times, but if you do the majority of your business operations in CA and have an LLC in any state you'll be subject to $800/year minimum franchise tax in CA still. https://www.lobbplewe.com/blog/2019/09/rules-for-out-of-state-llcs-doing-business-in-california.shtml https://www.lobbplewe.com/blog/2019/09/rules-for-out-of-stat...
  - philsnow 6y ago
    CA levies a (not insignificant) fee even for Delaware LLCs that operate in California.
    - bradgessler 6y ago
      Yes, $800. Same cost as forming the LLC.
      - awillen 6y ago
        Damn, that's what I was hoping to avoid :/
        irlib 6y ago
        Weather tax.
  - M5x7wI3CmbEem10 6y ago
    What should we check to see which state is the best to form an LLC in? I want to double-check whether it’s viable to form one in my state before considering Delaware. Why an LLC instead of an S-corp?
bradgessler 6y ago
If you do that then you have two problems: the same amount in fees from CA for being a foreign entity operating in that state + the fees of whatever state you formed your LLC/C-Corp/S-Corp/whatever.
m0zg 6y ago
Because then you end up paying there _and_ in CA. Any state you do business in demands a cut. Even so, if you ever intend to sell your company or do business outside your state, it makes sense to be a Delaware company - lots of lawyers know Delaware business law.

That's a good question... the last couple of LLCs that I've formed have been for businesses that are clearly operating in CA (one was for real estate here and the other for a local service company) and thus require the LLC there. Since I'm selling to the whole US here, maybe it is a better option... I will look into it.

unstatusthequo 6y ago
Lawyer here. Not yours. But consider Delaware or really any state. You do not need to form it in CA just because that’s where you are. Just get a registered agent and pick a state that doesn’t have oppressive LLC fees...
- moeamaya 6y ago
  We've gone over this with our lawyers many times, but if you do the majority of your business operations in CA and have an LLC in any state you'll be subject to $800/year minimum franchise tax in CA still. https://www.lobbplewe.com/blog/2019/09/rules-for-out-of-state-llcs-doing-business-in-california.shtml https://www.lobbplewe.com/blog/2019/09/rules-for-out-of-stat...
- philsnow 6y ago
  CA levies a (not insignificant) fee even for Delaware LLCs that operate in California.
  - bradgessler 6y ago
    Yes, $800. Same cost as forming the LLC.
    - awillen 6y ago
      Damn, that's what I was hoping to avoid :/
      - irlib 6y ago
        Weather tax.
- M5x7wI3CmbEem10 6y ago
  What should we check to see which state is the best to form an LLC in? I want to double-check whether it’s viable to form one in my state before considering Delaware. Why an LLC instead of an S-corp?

bradgessler 6y ago

If you do that then you have two problems: the same amount in fees from CA for being a foreign entity operating in that state + the fees of whatever state you formed your LLC/C-Corp/S-Corp/whatever.

m0zg 6y ago

Because then you end up paying there _and_ in CA. Any state you do business in demands a cut. Even so, if you ever intend to sell your company or do business outside your state, it makes sense to be a Delaware company - lots of lawyers know Delaware business law.