Have you finally decided it is time to start a business? If so, you must then decide which type of business better suits your needs. There are various business types, including a partnership, sole proprietorship, corporation, nonprofit organization, and Limited Liability Partnership “LLC.” Each type of business has pros and cons, which you should be fully aware of before making your final decision. Starting a business is a decision that will impact you for the rest of your life. So, be sure to choose carefully.
What Is An LLC?
An LLC is a uniquely American business structure. This just happens to be one of the most popular types of business structures. It features some of the same financial and legal protections as that of a corporation and a partnership.
The reporting requirements for an LLC are less formal than for a corporation. Depending on the number of members, LLCs can be taxed as a partnership, sole proprietor, or C or S corporation. If there are multiple members, an LLC can file as a partnership. The flexibility is far greater than most other business structures.
How To Select The Best State To Form An LLC?
The first step of forming is to select a state. All 50 US states have laws pertaining to LLC formation. The LLC laws for each state are unique. Most permit US citizens and non-US citizens to register an LLC in their state. Most people utilize an LLC filing service to handle their paperwork. This helps simplify the process as well as reduce the risk of a mishap.
It is not necessary to form an LLC in your resident state. However, there may be some repercussions when forming in another state. For example, it may be necessary to form not one but two LLCs when choosing a state other than the one you reside in.
Experts have carefully selected the best states for LLC formation. Of course, Delaware is at the top of the list because of its business-friendly qualities. A Delaware Division of Corporations report revealed that approximately 68 percent of Fortune 500 companies were formed in Delaware.
Wyoming, Alaska, Nevada, and New Mexico are also at the top of the list. Each option meets the criteria to be classified as a pro-business state. Before making a decision, it is always a good idea to research Wyoming LLC vs New Mexico LLC.
New Mexico LLC Benefits
New Mexico offers aggressive incentives to businesses and employers. These incentives are designed to help businesses facilitate investment and job creation. New Mexico’s business aggressive incentives are unique for each industry. New Mexico LLCs have several taxation options, including sole proprietorship, S or C corporation, or sole partnership.
Wyoming LLC Benefits
Wyoming is a great state to form an LLC as it imposes liberal business reporting obligations. One of the biggest benefits is the state does not tax corporate or personal income.
Wyoming LLCs do not have to pay a franchise tax. They are also offered what is known as a “lifetime proxy.” This law allows owners to elect someone else to represent their company stock or shares other than themselves.