After discussing the best states to form an LLC last week, I started to get a lot of questions asking about Delaware LLCs. Specially, people wanted to know if there were significant differences between Delaware LLCs and corporations and which was right for their business.
While looking for some additional information on the subject, I came across this video from IncNow.com that summarizes my thoughts perfectly. Rather than repeat the information, I’ll refer you to this video.
You are permitted to form an LLC in any U.S. state regardless of where you reside or where you intend to do business. Though some states offer more advantages to LLC owners, there are two negatives to creating an LLC in other states: you must register as a foreign LLC in each state you intend to conduct business, and you must designate a registered agent in the state in which you started your LLC.
There are two states commonly touted as the best for LLC formation: Delaware and Nevada.
The IRS requires a yearly filing depending on the tax status of your limited liability company. LLCs that elect to be taxed as corporations file Form 1120, partnership LLCs file informational Form 1065, and single-member LLCs taxed as sole proprietorships submit no additional filings.
If you co-own an LLC with one or more partners and are ready to leave the LLC, you may be able to sell or transfer your membership interest. Having a current LLC member buy out your share in the LLC is the easiest and most direct method, but you may also be able to assign your LLC membership interest to a third party.
Foreign LLC, foreign corporation, and foreign company are all terms that may refer to your business if your company solicits customers or engages in trade in multiple states. Foreign businesses are not necessarily ones that originate overseas; a foreign LLC is simply an LLC that has formed in one state and conducts business in another. Even if your principal place of operating is in your LLCs homestate, you may have to register as a foreign company in every state in which you do business.