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  1. #1

    Which state for online biz - LLC?

    Hello

    I will be forming an online business, providing subscription based content (recipes and cooking information) to customers in the entire US and also Canada.

    I would like to form an LLC, but which state would be most appropriate? I lean towards Delaware, since so many major corporations and Fortune 500 companies are incorporated there.

    THANKS!

  2. #2
    What's wrong with the state you're in?

  3. #3
    If you register outside the state you live in, there are going to be additional steps depending on what state you decide on. Many will require someone with a physical presence in the state be available to take legal documents for your company. Others won't let you form a business in that state when you're not actually there at all.
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  4. #4
    I'd recommend forming your company in Nevada. Delaware used to be, and stil is, a popular state to form an LLC or incorporate. Nevada has the added benefit of having no state tax. It is also state law that no officer, Director, employee can be held personally liable for the actions or debts of the corporation as long as the person didn't knowingly commit fraud. Of course, you'll want to double check with an attorney first.

    Your Resident Agent in Nevada (or Delaware) will be able to accept legal documents for your company. This is a pretty standard service.

    BTW, I have two corporations formed in Nevada.

  5. #5
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    everyone talks about Nevada and Delaware, but who really cares if majority of fortune 500 companies are incorporated there?

    if you incorporate outside of the state u r in, you are going to have to deal with additional paperwork. filing in your state would be best for now until your company is more established
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  6. #6
    Quote Originally Posted by ImBae.net
    everyone talks about Nevada and Delaware, but who really cares if majority of fortune 500 companies are incorporated there?

    if you incorporate outside of the state u r in, you are going to have to deal with additional paperwork. filing in your state would be best for now until your company is more established

    People care when it comes to asset protection and lowering your tax liability. I only had to fill out a form or two in order to qualify as a "foreign corporation" and do business in California. When you look at all of the benefits, it wouldn't make sense to not do it.

  7. #7
    Quote Originally Posted by ImBae.net
    if you incorporate outside of the state u r in, you are going to have to deal with additional paperwork. filing in your state would be best for now until your company is more established

    I'm sorry - but I DO NOT agree at all.

    He stated that he was beginning an ONLINE biz. For the sake of discussion, assume that he doesn't declare any physical presence in his own state (items are shipped from a warehouse and he has no official office where customers visit in his own state).

    If he incorporates in NEVADA - he will not have to pay sales tax on his sales regardless of whether they are shipped in or out of Nevada.

    If he incorporates in his own state, he will likely have to collect and pay sales tax on sales within his state and possibly to other states if there are any special tax agreements with his own state.

    If for example, he lives in CALIF and 80% of his customers are in CALIF, he will be required to collect and submit sales tax. That requires monthly filings, paperwork etc., that could have been AVOIDED 100% if he had incorporated in NEVADA.

    There really is a lot to consider when you are doing this -- and incorporating in your home state is NOT ALWAYS the answer.

  8. #8
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    First, get yourself an attorney who specializes in this. Do some research on your own and the meet your counsel. I also would recommend Nevada as well as Delaware.

    I believe you can actually incorporate online through some firms that are based in Delaware as well as Nevada. It will cost you around $300.

    Oh, and your lawyer will do all the paper work.
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  9. #9
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    i wouldn't recommend that you incorporate in nevada or delaware until your company is more established. it will just give you more paper work to worry about if you don't reside in neither of those two states.
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  10. #10
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    You shouldn't have any more paperwork as you can have a lawyer do it for you, which you should anyway to make sure everything is filed correctly.
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  11. #11
    its quite easy to open new delaware company without sending any papers.

  12. #12
    Quote Originally Posted by ImBae.net
    i wouldn't recommend that you incorporate in nevada or delaware until your company is more established. it will just give you more paper work to worry about if you don't reside in neither of those two states.

    Sorry but I couldn't disagree more. This is exactly when he should incorporate in either one of those two states. Before his company is more "established".

    I'd also doublecheck those online companies that incorporate you for $300. A lot of them just prepare the paperwork for you. Filing your Initial List of Officers is$125 in Nevada. You still have to file your Articles of Incorporation, pay for a Resident Agent and a couple of other things.

  13. #13
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    The best thing to do is to get a local attorney who specializes in corporations, etc.. Instead of incorporating in your state, you could have him do it in Delaware or Nevada instead.
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  14. #14
    Quote Originally Posted by ayksolutions
    The best thing to do is to get a local attorney who specializes in corporations, etc.. Instead of incorporating in your state, you could have him do it in Delaware or Nevada instead.
    WHY is it you continue to pawn this off to an attorney?????

    If you can use a seach engine and fill in multiple choice questions, there is NO NEED for an attorney to file the forms for Nevada or Delaware.

    Boy, I hate to say this -- but IMHO, if you can't do this yourself, you should not be going into business. This is probably one of the easiest things you will do as a business owner.

    Filing these documents is straight-forward. There really is NO legal advice needed to do so.

    Use an attorney when you need legal advice and direction. BTW - most "local attorneys" use the same online filing services that YOU would use if you just took 5 minutes and did it yourself.

  15. #15
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    Quote Originally Posted by custsrvcrep
    WHY is it you continue to pawn this off to an attorney?????

    If you can use a seach engine and fill in multiple choice questions, there is NO NEED for an attorney to file the forms for Nevada or Delaware.

    Boy, I hate to say this -- but IMHO, if you can't do this yourself, you should not be going into business. This is probably one of the easiest things you will do as a business owner.

    Filing these documents is straight-forward. There really is NO legal advice needed to do so.

    Use an attorney when you need legal advice and direction. BTW - most "local attorneys" use the same online filing services that YOU would use if you just took 5 minutes and did it yourself.

    Don't get your panties in a twist there pal, might get a rash. I've done both, used online filing system as well as go through an attorney. The attorney that I used was under $100 (and no, he's not a public defender). I found out that there are in fact some things that one can over look simply because they are not familiar with this area of running a business. Sure, you can do some research, which I have done as well. It is always a good thing to know something prior to consulting anyone so you know you are not getting smoke blown up your ***. However, from my experience, I would recommend atleast consulting with an attorney. A lot of times it is free for the first time, so you don't lose anything there.

    All in all, it never hurts to get an opinion of a professional who deals with this sort of thing. Perhaps a person looking for a new host should do some research and just go for it, without consulting anyone else? I don't think that's too wise.
    Last edited by ayksolutions; 12-23-2005 at 12:46 AM.
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  16. #16
    All in all, it never hurts to get an opinion of a professional who deals with this sort of thing.
    After removing my twists, I thought I would respond.
    <and I am joking here, there is no malice>

    I absolutely agree that one should get the advice of professionals -- when it is warranteed. I've certainly spent my share of legal fees.

    But then again - many of us (including you I'm sure) -- are probably more "professionally knowledgeable" than half the attorneys who work specifically with our industry. And this board's membership is always willing to share.

  17. #17
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    Quote Originally Posted by custsrvcrep
    After removing my twists, I thought I would respond.
    <and I am joking here, there is no malice>

    I absolutely agree that one should get the advice of professionals -- when it is warranteed. I've certainly spent my share of legal fees.

    But then again - many of us (including you I'm sure) -- are probably more "professionally knowledgeable" than half the attorneys who work specifically with our industry. And this board's membership is always willing to share.

    No offense taken. Just thought it would be a fun way to respond.

    I completely agree with you that a a lot of us here are indeed very knowledgeable regarding this kind of thing and trust me, I also have worked with attorneys/professionals (that's what they like to be called I guess, although I'd disagree), who have no idea what to do or how to handle something like this. On the other hand, there are those who are indeed good and useful. You definitely have to do your research not just on the subject but on a particular professional that you may be working with.
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  18. #18
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    But, HOW does one search for attorneys that do 'such' (web hosting related stuff) work?

    I tried to search for "technology lawyers" in the buffalo(western NY area) --- I have yet to find one in the yellow pages that mentions this.

    Please advice.
    Proabably if i find one i could also ask them about LLC formation and info on delaware etc.I have done my research and have very specific questions to ask them.

    Pl do advice on how to find lawyers specific to web hosting (resellers)?

    thanks

  19. #19
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    Well, there are no lawyers specific for web hosting. You need to look for lawyers who specialize in corporations and similar fields. There are many of those, you shouldn't have any problems finding them.
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  20. #20
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    I believe the LLC has to be formed where the physical location of the business resides unless if you have a satellite office. Consult http://www.legalzoom.com/redesign.html for more information.

  21. #21
    Quote Originally Posted by gearworx
    I believe the LLC has to be formed where the physical location of the business resides unless if you have a satellite office. Consult http://www.legalzoom.com/redesign.html for more information.

    Not really. He can live in any state, incorporate in Nevada, have his resident agent accept his legal documents and then qualify as a Foreign Corp in his home state. It's a fairly common practice.

  22. #22
    Actually, according to the Texas state folks, this is wrong/illegal. If your company is registered state A, and you are running the business from state B, you need to get permission in state B to conduct business there. Something about being a foreign corporation or foreign business. Being an online or brick-and-mortar business does not matter. When I moved to Texas, the paperwork to conduct business there for my Florida corporation was several hundred dollars more than just forming a new corporation!

    You really ought to consult an accountant/attorney about this to make sure what you read on a forum is actually true.




    Quote Originally Posted by custsrvcrep
    I'm sorry - but I DO NOT agree at all.

    He stated that he was beginning an ONLINE biz. For the sake of discussion, assume that he doesn't declare any physical presence in his own state (items are shipped from a warehouse and he has no official office where customers visit in his own state).

    If he incorporates in NEVADA - he will not have to pay sales tax on his sales regardless of whether they are shipped in or out of Nevada.

    If he incorporates in his own state, he will likely have to collect and pay sales tax on sales within his state and possibly to other states if there are any special tax agreements with his own state.

    If for example, he lives in CALIF and 80% of his customers are in CALIF, he will be required to collect and submit sales tax. That requires monthly filings, paperwork etc., that could have been AVOIDED 100% if he had incorporated in NEVADA.

    There really is a lot to consider when you are doing this -- and incorporating in your home state is NOT ALWAYS the answer.

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