Ask HN: Where to form an LLC

menloparkbum · on Jan 23, 2009

You want to form the LLC in the state where you live and do all your work. There is no advantage to forming an LLC in a different state. Other business entities (S, C corp) are a different story.

hbien · on Jan 23, 2009

I'm not a lawyer, but I definitely agree you should form an LLC in your home state.

For CA, I thought forming an LLC in another state would save me $800/year. But after some research, it doesn't matter where you form your LLC. If your business is operating in California you still have to pay the $800 yearly fee.

jhancock · on Jan 23, 2009

Given your parameters, the thing to keep in mind is where you are incorporated in case you need to defend yourself in a lawsuit. It is almost always better to defend on you home turf as opposed to taking trips and hiring lawyers in Delaware.

IANAL, but I have been involved in lawsuits. Home turf advantage can be a good thing.

gamache · on Jan 23, 2009

This is a very good point, and one I had failed to consider.

skmurphy · on Jan 24, 2009

Someone in your situation based in CA would be better served to form a Sub-S as the tax treatment is more favorable. You should talk to a tax accountant (not just an attorney) about the tax implications of LLC vs. Sub-S in MA, there may be similar issues.

ddemchuk · on Jan 24, 2009

I'm looking to start a LLC very soon as well, but my business partner lives in Virginia and I live in California...What state should we choose at that point?

(don't mean to thread jack)