Can I Start an LLC in a State I Don’t Live In? 

You can start an LLC in a state you don’t live in. In some cases, other states offer additional advantages that make them a smart choice. If you’re in the process of starting a business and need an LLC and wondering, “Can I start an LLC in a state I don’t live in?” The answer is “Yes!” If you form an LLC in another state, you’ll need to maintain a registered agent and registered office. Read on to learn about the key factors to consider and the best states to form an LLC. 

How Does Forming an LLC Outside Your Home State Work?

To form an LLC outside your home state, you’ll follow similar steps as in-state LLC formation. Here are the basic steps:

• Choose a state in which to form your LLC
• Choose a name for your LLC. Learn more about naming an LLC. 
• Choose a registered agent and a registered office
• File the Articles of Organization (or equivalent) with the Secretary of State
• Prepare an LLC operating agreement
• Obtain an EIN
• Open a business bank account

Required documentation and fees vary by state but range from $40 to $500. To get a foreign LLC registration in the state where your future business will operate, you must appoint an in-state registered agent with a registered office.

Why Form an LLC in Another State?

Some states offer benefits like tax advantages, flexible business regulations, or stronger liability protection, which may make them more appealing for forming an LLC. Wyoming, Delaware, New Mexico, and Nevada are the most popular states to form an LLC. There’s a detailed explanation below of why you might want to choose one of these states. 

Key Factors to Consider Before Starting an LLC in Another State

Before starting an LLC in another state, here are the key factors you should consider:

1. Laws and Regulations of the State

It’s essential to understand the laws and regulations of the state if you want to form an LLC in a state other than your home state. For example, the registration fees, filing requirements, and registered agent requirements can all differ from state to state.

In addition, you must register your business entity as a foreign entity in any other states where you do business. Normally, you won’t have to register the LLC in your home state unless you plan to operate there.

2. Registered Agent 

A registered agent is the official point of contact for your business entity. This can be any person or business entity appointed to handle official correspondence for the business. Exact criteria vary by state, but generally, the registered agent can be any individual over the age of 18 or a business entity located in the state. The registered agent must maintain a registered office, which is a physical office located in the state, and open during regular business hours.

3. Business Operations and Management

The physical location of your LLC affects day-to-day operations, from hiring employees to warehouse management or sourcing. With an online-only or service-oriented business, you might not have to consider physical shop locations or sourcing. 

However, all businesses need to carefully consider the impact of operating a business in a state you don’t live in, including factors such as taxes, licensing, and banking. You may also need to consider hiring employees and management of physical locations. 

4. Hiring Employees 

If you hire employees in a different state, you must comply with local state laws, including labor laws, insurance, and compliance standards. Keep in mind that states may have different procedures for tax filings. Check local state procedures, labor laws, and tax obligations before choosing a state to form an LLC. 

5. Maintaining Compliance and Legal Obligations

Ongoing responsibilities and obligations of LLC owners include filing annual reports and paying the annual filing fee. This varies greatly by state. In addition, you’ll have to pay relevant state and federal taxes.

What Are the Best States to Start an LLC?

The following four states are long-time favorites for founders and entrepreneurs for good reason. Here’s an overview of the best states to start an LLC. 

1. Wyoming

Wyoming has been gaining popularity as a pro-business state. It doesn’t charge either income or franchise taxes, and the annual filing fees are minimal. LLC formation costs are relatively low, and Wyoming is known for immediate LLC formation. The state also earns high marks for exceptional privacy protection for LLC owners. Find Wyoming LLC’s pros and cons here. 

2. Delaware

Delaware remains the number one choice for forming an LLC due to its business-friendly reputation. It doesn’t tax out-of-state income, which can result in meaningful tax savings. In addition, the initial LLC filing fees and annual franchise taxes are low compared to other states, making Delaware a cost-effective solution. 

In case a Delaware LLC is involved in a lawsuit, Delaware’s famous Chancery Court, which specializes in business disputes and is well-versed in business matters, will help you secure a favorable outcome. Find more about Delaware LLC’s pros and cons. 

3. New Mexico

New Mexico offers significant LLC benefits. It has some of the lowest filing fees in the nation, along with no annual reporting requirements. New Mexico LLCs also offer additional privacy protection.

4. Nevada

Nevada also doesn’t impose any income taxes or franchise taxes. However, it does charge a gross receipts tax. It is also one of the states that offers additional privacy protection for LLC owners. You can even form an Anonymous LLC in Nevada. The state also allows you to create a special type of LLC called a Series LLC, which consists of a parent LLC and one or more divisions, called “series.” 

Despite the advantages, Nevada LLCs are required to file an annual list of members and managers in the state. It also has higher filing fees when compared to other states.

Launching a Business in a New State

Whether you’re a foreigner planning to start a business in the US or wondering about a Canada LLC, launching a business in a new state requires research and a good team to ensure compliance. doola business and LLC formation services can help. 

Get the help you need from doola’s fast business formation services in all 50 states. doola will help you form an LLC, apply for an EIN, and open a business bank account so you can focus on developing your business plan and launching the business. 

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