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The Best States For LLC E-Businesses

The e-commerce industry is exploding. Stores that have temporarily shuttered their doors may never reopen. Analysts agree that starting a firm that will do well right now and have the ability to scale up for 2025 is likely to be in the e-commerce area.

A popular misconception US entrepreneurs have is that you may only register an LLC E-Business in the state where you physically live, but this is not true.

You can form an LLC in any state. But the state you choose to form your LLC in will determine which advantages or disadvantages you have. It is highly suggested to rather form an LLC in the state you live in, in order to save on costs, according to the US Census Bureau. When you form an LLC in the state you live in, it is referred to as a domestic LLC and one formed in an outside state is called a foreign LLC.

What is an LLC?

An LLC, or limited liability company, is a legal business entity that combines aspects of both corporations and sole proprietorships. An LLC can have one owner, or more than one, where the various owners are called members. The shares of the company might not be divided equally, creating the opportunity for senior and junior members.

E-Businesses

Why form an LLC?

The main reason businesses choose to form an LLC over a normal corporation is the paperwork. Corporations have tons and tons of paperwork they need to maintain, including bylaws, minutes from various meetings, and stock ledgers. LLCs have significantly less paperwork, with filing an annual report as the most important.

How to form an LLC

There are 5 requirements to forming an LLC:

  1. You need to have a name for your LLC
  2. The names, addresses, and signatures of the members of the LLC needs to be provided
  3. Every LLC needs to have a registered agent, this can be the owner or a hired service
  4. Proof of the physical address of the business
  5. The management style that the business is following

The following 3 states are the best for starting an LLC E-Business:

Delaware

Delaware is number one on this list, due to the fact that it is statistically most popular. This state has a very strong reputation for being business-friendly. Delaware provides owners with a quick filing process as well as improved protection. The filing fee for an LLC is only $90, which is on the low end, but the annual report is $300, which is significantly higher than other top states. Delaware has a specific court that focuses on business affairs, called the Chancery Court. The judges’ extensive business experience ensures fair outcomes for matters brought before the court.

Wyoming

What makes Wyoming stand out is the state’s low fees and amazing tax benefits. The initial filing charge is $100, with an annual report fee of $50. The tax structure in this state is very advantageous towards businesses. There are no company or personal income taxes, and the country’s asset protection laws are among the best in the world. If you decide to form a foreign LLC, then Wyoming is a great option. Though many states require you to file for an LLC in the state you are living in, Wyoming allows for everything to be handled online, making their regulatory environment much more flexible.

Nevada

Corporate and personal tax does not apply to the state of Nevada, making it a great option for aspiring entrepreneurs. The state also does not require you to set up an operating agreement or have yearly meetings, which helps you avoid future snags. Nevada prides itself in keeping business owners’ details private. The state does not have an agreement with the IRS in regards to information-sharing. While Nevada has several advantages, it’s worth noting that annual costs have been rising for several years. The filing fee is $425 as of 2019, and the annual charges are $350.

Advantages of an LLC

Of all the business types in the US, an LLC is the easiest to form. Other entities have far more legal hoops to go through, the only basic formation requirements are to prepare and file your articles of organization with your chosen state government. An LLC is required to keep some business records, but not to the same level as other businesses. Another advantage is the flexible managerial structure. There is no restriction on the number of members. When it comes to tax, LLCs have the option of being taxed as either a corporation or a pass-through company.

Final Thoughts

When comparing the advantages of LLCs with that of other entities, it is easy to see why entrepreneurs choose to form them. Every state in the US has its own regulations and requirements regarding the filing and forming of LLCs. Not one is better than the other, it is more a case of choosing what suits you best.

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