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Forming LLC in Nevada

Asked by: Jay Bee - 30 January, 2013 We are an internet based sales company who uses drop shippers from a range of states to ship our products.

Our LLC will have 1 owner who lives in NJ.

Does it make any sense to register the business in a state like Nevada?

Answered by: Robert Kowalski - 30 January, 2013 Jay,

It really depends on whether the owner is actively involved in management of the business, and if not then where the management of company affairs is taking place.

There are many good reasons why states like DelawareNevada and Wyoming are so popular as incorporation destinations, however often times people pick one of these states for all the wrong reasons. First of all, when forming an LLC there is no tax advantage, since LLC is not taxed on company level, but on member level. Second, even if the company is registered in one of those states it doesn't mean it is not required to be registered in other states. When owners of the company are living in another state (like New Jersey) and take active role in running the business, in essense the business creates nexus in New Jersey and is required to foreign-qualify (register as "Foreign Entity") in New Jersey. When thinking about it, it might be best just to register in New Jersey to begin with and save on the double registration.

So the question always is what is the purpose of registering in an incorporation-friendly state, and then it can be examined to see whether such registration will in fact achieve the desired result or not. You can email me the reasons why you considered Nevada in the first place, and I will help you analyze it.


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