In Which State Should You Create an LLC for Your Online Business?

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Written by: LLCStars Team
Read 6 minLast updated on

Individuals that have owned a business have probably heard about the possibility of forming an LLC. Typically, registration happens in the state where the business operates. However, when it comes to online businesses, one can register them in any state. This guide will explore the options and determine the best state to form an LLC for an online business in.

So, whether one is starting a brand-new venture or thinking about taking a different route with their existing business, read this article to learn more.

Which State Is the Best to Form an LLC for an Online Business?

Certain states indeed offer LLCs at a much lower price. Moreover, it is also true that one can register an online business in another state. In fact, one can form an LLC for an online business anywhere. However, the best state to form an LLC for an online business is the one they reside in.

That’s right: forming an LLC in one’s home state is the wisest choice. Sure, the price of that particular state might be higher than others, but eventually, it is the most cost-optimized option. An individual won’t have to travel to another state, the entire process happens near them, and in case of any legal obligations, they are always available. Not only that, but if they live in a different state than the one their LLC is registered to, they will have to register it as an out-of-state corporation. This means two LLCs, one in their home state and where the company is operating. This doubles the cost and defeats the entire purpose of “cheap LLCs.”

However, if one is not a US resident, things might be a little different for them. The cost of LLCs can range anywhere from $40 to $500. In that case, it is best to consult an attorney and figure out the best state to start an LLC that suits their business.

Best States to Start an Online Business

If one is confused about the best states to start an online business in, one should consider a few key factors. Essentially, having e-commerce or an online store means they can cater to any delivery in the world. Even if they are a big company, they can still take orders over many locations. That means that they can form their online business anywhere in the country. The recommended option is to establish their online store right where they live.

However, if that is not possible, one should look at several factors. This includes the warehouse costs, how far away their warehouse is from the central market, and of course, the taxes of that state. Business owners should consult a professional at this point and figure out a place where the cost would be minimal. Moreover, it would be best to consider the business tax of that state and the difficulty level of forming an LLC.

F.A.Q.

How does one form an LLC?

One can opt for an LLC formation service and let them take care of things. Or, one can do it themself in a few simple steps. Now that we have concluded that the best state to form an LLC for an online business in is one’s home state, let’s talk about the process. First, business owners have to choose a name for their LLC. After they have a unique name that doesn’t violate any state laws, they have to hire a registered agent. Next, they must gather the required documents and certificates if the state demands one. After that, they have to obtain an employer identification number (EIN) from the state. One can also get an LLC organizer to fill in the documents and make the process seamless. Lastly, acquire a business bank account.

Does one need an LLC for an online business?

Whether one is the sole proprietor of their business or operates with shareholders, forming an LLC is always a good idea. If one is the sole owner, their assets and the business are considered the same. This means that any loss to the business could affect one’s assets. Business owners never know when they will hit a bump in the road, and if they do, they could lose all their assets along with the business. So, does one need an LLC for their online business? Probably not, but they should have one anyway.

Can one register their online business in another state?

Yes, you can. Unlike a traditional business, you can register an online business anywhere, and all you need is a registered agent to use their address for the filing. However, this rule is void for some states, such as Delaware.

Conclusion

So, to wrap it up, forming an LLC in your home state is the best option. It reduces unnecessary costs and makes the process easier for you. However, if you are not a US resident, you should consult an attorney to make the best decision. The best state to start an LLC in for non-US residents may vary depending on the business type. Above all, forming an LLC for an online business is essential whether you reside in the US or not.

As always, don’t forget to leave your feedback in the comments down below. You can check our website for more tips and guides on learning how to run and register your LLC business. The article LLC for YouTubers has gained special attention in the past few days, so be sure to check that out.

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