What state should I start my business?

What Is the Best State to Start an LLC or Corporation?

Some states are known for being “business-friendly.” This means they may have lower taxes, make it easier to start and run a business, or even offer better support for startups.

Usually, the best state to register your business is your home state—the one where you live and plan to work. Even if you register in another state, if you do business in your home state, you’ll still have to register there and pay taxes and fees.

When people compare states, they look at things like:

1. How many businesses survive their first year.
2. How low or high the taxes are.
3. The cost of rent or buildings.
4. How expensive it is to live and work there.
5. How easy it is to hire good workers.

It is probably impossible for all of these factors to be perfect in one state. A state with a skilled workforce is likely to have a high demand for workers and real estate, leading to a higher cost of living. Skilled workers are in a better position to demand higher wages and benefits, like excellent healthcare coverage. While this adds to business costs, it can also boost the bottom line—since happy employees tend to be productive employees.

No state is perfect, but some come close. That’s why Delaware, Nevada, and Wyoming often get picked by business owners.

BENEFITS OF DELAWARE BUSINESS FORMATION	BENEFITS OF NEVADA BUSINESS FORMATION	BENEFITS OF WYOMING BUSINESS FORMATION
Delaware has laws that protect business owners. Its General Corporation Law limits the liability of corporate directors and officers.  The Delaware Court of Chancery has handled corporate disputes since 1792.  The Division of Corporations (part of the Delaware Secretary of State’s office) is known for being efficient, responsive, and profitable. You don’t have to pay corporate income tax if you don’t do business in the state. There's no sales tax or personal property tax. Business owners can stay practically anonymous (by using Registered Agent services) and don’t need to live in Delaware.	Businesses in Nevada don’t have to pay many taxes. There’s no franchise tax and no income tax for individuals or companies. Companies do, however, need to file a report once a year and pay for a business license annually. Nevada’s business laws help protect companies from being taken over without permission. The state also has special business courts that handle legal matters quickly. Nevada law protects business owners from personal liability for business actions.  Managers or directors don’t need to live in Nevada.	No state corporate or individual income tax. It also has no franchise tax or gross receipts tax. Non-resident business owners are welcome.  Some of the lowest property and sales taxes in the country. Annual filing fees are minimal. Members, managers, and shareholders of Wyoming businesses have confidentiality protections.

 

What Is the Best State to Form a Business if My Business Operates in Multiple States?

As mentioned earlier, it’s usually not worth it for most businesses to incorporate or organize anywhere other than the state where they are headquartered or primarily located.

Your business will need to register as a foreign corporation or LLC in any state where it has a business presence. This means it will be subject to those states’ filing requirements, which may include annual or other periodic fees.

That said, if you had the choice of any state in the U.S. to incorporate or organize your business, Delaware, Nevada, and Wyoming are likely to be attractive options. They all offer low initial filing fees, and subsequent taxes and fees are lower than in most other states.

No matter what kind of business you want to start or where in the U.S. you plan to start it, Rocket Lawyer is here to help. 

  

Key Takeaways The state where you live and do business is usually the best place to form an LLC or corporation. Businesses must pay taxes in any state where they make money, provided that state has corporate or personal income tax. Delaware, Nevada, and Wyoming top many lists of the best states to form a business.