The US economy is recovering from the downturn which the coronavirus has caused. In fact, the economy is now, “3 percent larger than it was just before the pandemic”. This is a sign that small businesses have been able to invigorate the economy. Something which every small business should consider is incorporating into an LLC. A limited liability company (LLC) protects your personal assets from your business and your business assets from your person. It is one of the best structures to use when incorporating your business. Different states offer different benefits for LLCs and companies generally which is why it is worth considering starting your LLC in a state which is not your own. Find authority.
1. South Dakota
South Dakota is a great state to consider starting your LLC because it does not have any state income taxes. Additionally, South Dakota has a 0% corporate tax rate which means that your business will be liable for very little tax. The tax benefits do not end there. South Dakota boasts other tax incentives which include no inheritance tax, no personal property tax and no business inventory tax. Another great benefit of forming an LLC in South Dakota is that the process can be completed online and that it does not have stringent requirements. This process is easy and affordable.
Alaska is the largest state in the US and also one of the last states to join the union. Alaska has no income tax and no sales tax. However some cities do collect local sales tax but these taxes are low. There are also industry specific tax credits available in Alaska but most of these credits require your business to operate within the state. The state provides new business owners with very helpful loan programmes but this also requires that the business operate within the state. The fees to set up an LLC in Alaska are lower than the fees for other states which is another incentive to set up an LLC in Alaska.
Wyoming is a state which has appealing policies. Another business friendly policy Wyoming offers is that they do not tax corporate or personal income. Additionally, the sales tax rates are very low in Wyoming. The only states with lower average sales tax rates are Hawaii and Alaska. Wyoming also offers a unique bonus which no other state does. You are able to appoint a lifetime proxy which is another individual who will represent your stocks or shares on your behalf. This allows business owners to operate with complete anonymity.
Nevada is another state on this list with great tax advantages. Nevada does not set tax on personal income, corporate income or franchises. However, Nevada does need business owners to pay annual business filing and license fees. Nevada is one of the few states that makes allowances for anonymity with public filing. It is possible for your LLC to be completely anonymous in any registration filing which is public. Because Nevada has no income tax department it does not have an information sharing agreement with the IRS.
Delaware has a reputation for being a very appealing choice for business. It is easy and affordable to start an LLC in Delaware thanks to a simple filing process and low startup fees. Another strong selling point for Delaware is the Chancery court. This is a court which deals exclusively with business matters. This means that business related cases are heard faster and more efficiently than in other states. Additionally, Delaware does not require that officers, shareholders or directors be resident in the state. A very helpful allowance for business owners who incorporate in Delaware but live elsewhere.
There are many risks associated with forming an LLC and these include operating risks. For more information on business insurance for an llc click on the link to be redirected to The Really Useful Information Company (TRUiC)’s website.
There are many options in terms of state when considering where to start your LLC. All of which offer different advantages and disadvantages. It is often the best move to start your LLC in your home state as this increases the overall convenience to you as well as reduces the amount of costs you will be liable for. However, this can depend from business to business as it may be more cost effective for your business to incorporate in a state in which it does not operate. If you are considering this, these five states are fantastic places to incorporate an LLC.