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Lead Thinking - Incorporating a LLC

6 points by maccman 17y ago

SingAlong 17y ago
Delaware imposes no state income tax on a business that does not operate within the state. Does this mean that I can incorporate there and run the business with a physical presence from some other country?
- darshan 17y ago
  It certainly sounds like that's the case, based on this sentence from the article: I recommend getting a firm to do it for you, especially if it’s your first time, or you’re outside the US.
  - ovi256 17y ago
    That would be phreaking awesome, I wondered if that was possible for years.
- maccman 17y ago
  Yes. I am a UK citizen, and run my US LLC from the UK. It's possible to do everything as a non resident alien, but complicated. I'll be posting more on leadthinking.com about how to get a bank/merchant account.
- zngtk4 17y ago
  Does this mean that I can incorporate there and run the business with a physical presence from some other country? Yes, but you will still pay taxes in that other country. In fact, most states other than Delaware will also not charge you income taxes if you incorporate there but not not earn money in that state.
zngtk4 17y ago
The advice about Delaware and Nevada isn't necessarily good advice in terms of liability and in terms of taxes. If you're sued, you may have to go to Delaware or Nevada to defend yourself, and even if not, you may be subject to the laws of Delaware or Nevada, which will be different from the state you are operating from. From a book I have (called Asset Protection by Adkisson and Riser): Under state law, having a registered agent in the state of incorporation creates nexus sufficient to allow the corporation to be sued in that state. This fact alone may affect the decision where to incorporate. A jurisdiction where jury verdicts tend to be very conservative may be preferable to one with a reputation for runaway jury awards. The cost of defending a lawsuit may also be a significant factor in this decision. Defending a lawsuit in the owner's home state will be substantially cheaper than defending the same lawsuit across the continent [or as one person here says, across the world]. This may be a factor in deciding where to incorporate Delaware also imposes different laws on the roles and duties of directors and treatment of Shareholders. Do you know what these are? Further you do not avoid taxes by incorporating in Delaware! You have to pay taxes in the state you operate in. So even if you are a Delaware corporation, you would pay taxes in Pennsylvania if that is where you operate (and you have to operate in a different state to not pay Delaware corporate taxes).
carbon8 17y ago
AFAIK, there aren't a lot of benefits to registering an LLC in a state other than your own and it can end up costing more when you register to conduct business in your own state. I recommend anyone considering this to treat out-of-state registration with skepticism and research it more. It's been discussed on HN, there's info on nolo.com and you can ask an attorney.
- fatdog789 17y ago
  Agreed. You end up having to pay taxes in two states (or at least, one more state than you would normally pay taxes in), instead of one, and the taxes aren't the same... which means you have to match up all income and expenditures. Attorneys, at least those that incorporate LLCs for small businesses, are cheap, and will frequently double as service agents (for a small yearly fee).

6 points by maccman 17y ago

Delaware imposes no state income tax on a business that does not operate within the state. Does this mean that I can incorporate there and run the business with a physical presence from some other country?

darshan 17y ago
It certainly sounds like that's the case, based on this sentence from the article: I recommend getting a firm to do it for you, especially if it’s your first time, or you’re outside the US.
- ovi256 17y ago
  That would be phreaking awesome, I wondered if that was possible for years.
maccman 17y ago
Yes. I am a UK citizen, and run my US LLC from the UK. It's possible to do everything as a non resident alien, but complicated. I'll be posting more on leadthinking.com about how to get a bank/merchant account.
zngtk4 17y ago
Does this mean that I can incorporate there and run the business with a physical presence from some other country? Yes, but you will still pay taxes in that other country. In fact, most states other than Delaware will also not charge you income taxes if you incorporate there but not not earn money in that state.

zngtk4 17y ago

The advice about Delaware and Nevada isn't necessarily good advice in terms of liability and in terms of taxes. If you're sued, you may have to go to Delaware or Nevada to defend yourself, and even if not, you may be subject to the laws of Delaware or Nevada, which will be different from the state you are operating from. From a book I have (called Asset Protection by Adkisson and Riser): Under state law, having a registered agent in the state of incorporation creates nexus sufficient to allow the corporation to be sued in that state. This fact alone may affect the decision where to incorporate. A jurisdiction where jury verdicts tend to be very conservative may be preferable to one with a reputation for runaway jury awards. The cost of defending a lawsuit may also be a significant factor in this decision. Defending a lawsuit in the owner's home state will be substantially cheaper than defending the same lawsuit across the continent [or as one person here says, across the world]. This may be a factor in deciding where to incorporate Delaware also imposes different laws on the roles and duties of directors and treatment of Shareholders. Do you know what these are? Further you do not avoid taxes by incorporating in Delaware! You have to pay taxes in the state you operate in. So even if you are a Delaware corporation, you would pay taxes in Pennsylvania if that is where you operate (and you have to operate in a different state to not pay Delaware corporate taxes).

carbon8 17y ago

AFAIK, there aren't a lot of benefits to registering an LLC in a state other than your own and it can end up costing more when you register to conduct business in your own state. I recommend anyone considering this to treat out-of-state registration with skepticism and research it more. It's been discussed on HN, there's info on nolo.com and you can ask an attorney.

fatdog789 17y ago
Agreed. You end up having to pay taxes in two states (or at least, one more state than you would normally pay taxes in), instead of one, and the taxes aren't the same... which means you have to match up all income and expenditures. Attorneys, at least those that incorporate LLCs for small businesses, are cheap, and will frequently double as service agents (for a small yearly fee).