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Delaware vs. Illinois LLC for an Online Art Gallery

Asked by: Ellen - 21 February, 2012
https://d25eic0jctudgb.cloudfront.net/images/site/avatars/default.png-f1597c1da25f30f8c1a941405e8391c8 I'm going to be starting an online art gallery and want to figure out where I should set up my business. I do have one foreign investor so will probably go with the LLC structure (over an S corp). In addition to the online gallery, I will most probably have a few physical art shows/ exhibitions throughout the year in Chicago (where I live). It seems that if I use a Delaware LLC, I will still have to pay the foreign entity fees in IL (due to the art shows) and those fees are the same as filing for an Illinois LLC outright. Is that true? If so, then what are the benefits of going with a Delaware LLC? Also, do I have to charge Chicago sales tax on everything I sell even if I choose the Delaware LLC? Thanks for your help!
Answered by: Robert Kowalski - 21 February, 2012
https://d25eic0jctudgb.cloudfront.net/images/site/avatars/35.jpg-687fc92d5f6c5febcbdccb6895b08b8c Dear Ellen,

As far as I understand your business has two parts - the online sales and the off-line art shows. Theoretically, for an online only business you would be able to have a Delaware LLC, however even in that case if you maintain physical operations in Illinois you would be required sooner or later to register that LLC in that state as a foreign entity.

Given the fact that you would also be running art shows in Illinois then I would say registering in Illinois would be inevitable anyway.

As far as sales tax goes you would need to collect it on all sales to Illinois based customers, since your business is located there (just FYI Delaware has no sales tax so you don't need to worry about it either way).

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