When you’re planning to launch an online business you’re probably thinking of filing LLC in your home state. While online business owners have flexibility on where they can incorporate, every state offers different perks one can take advantage of. 

In this post, our experts will pick the best state to form an LLC for an internet business to help you decide which option to go for. 

Forming an LLC for an Internet or Online Business

If you’re from a foreign state, you may find incorporating an online business quite appealing because it gives future LLC owners freedom to choose which is the best option to form their corporation. Any law firm you’d like to seek legal advice from will recommend a thorough inquiry when looking for the best states. 

Whether it’s Nevada, Wyoming, or Delaware, anyone can register their online company in another state as long as they’re operating their business in that state. To form your LLC online also means cutting costs like franchise tax, long-term lease commitments and stocking inventory [1]

Best States to Form an LLC for an Internet Business

1. Delaware

If you’re launching an online limited liability company (LLC) with minimal transactions, then the best state to form your corporation is in the state of Delaware. Compared to other states, their initial filing fees and franchise taxes are noticeably lower. Hence, it’s a business-friendly LLC in the state. A Delaware LLC also won’t require online business owners to pay out-of-state income taxes. 

Delaware State flag

Besides that, Delaware is one state that’s famously known for its Chancery Court, a system exclusive for businesses that may need help in terms of disputes and fees. 

2. Wyoming

Among many states in the country, the state of Wyoming counts as the best state that is most favored by many non-US and foreign corporate companies when it comes to filing their LLCs. With a Wyoming LLC, you can take advantage of lower initial filing fees and franchise taxes. 

Not only does Wyoming have the most protective charging order policies that ensure the safety of LLCs’ assets, but this state also allows a non-U.S. corporation to conveniently conduct business transactions by having a local subsidiary for your Wyoming LLC. 

3. Nevada

For tight-budgeted businesses looking into waiving annual fees, one of the best states to form an LLC for an internet business is the state of Nevada. If you choose to incorporate in this state, a Nevada LLC won’t require you to pay business income tax, state income tax, franchise tax, or corporate tax per year. 

welcome to nevada sign

You’ll also have no problem with your privacy should you choose to register in Nevada. A Nevada LLC doesn’t have an information-sharing agreement with the IRS which means online business owners may stay anonymous in the state of Nevada. 

If you want to have a real estate company soon, here are the best state to form an LLC for real estate. Read next to know what’s the best state for your business!

Important Factors In Forming an LLC For Online Business

Although incorporating online offers lots of advantages, there are many factors online business owners need to consider when incorporating in a different state. One of them is the annual charges for taxes that the state may levy in your business like sales tax, franchise taxes, and other business fees. 

person typing on laptop

Suppose your home state isn’t within the United States like California. In that case, you may be required to hire an excellent registered agent to represent and receive legal documents on your behalf when you incorporate your business in another state.  

Should I Manage my LLC Outside My Home State?

Despite the comfort and perks of lower taxes when you register your online business in your home state, there are other states that offer features that will suit your business needs. This statement is especially true if you’re located outside of the US. Thus our team advises you to explore other state options in this list to find the best state for your business or company. Take into consideration the business franchise taxes and fees you need to pay in any state. 

To help you with the long process of creating an LLC, here are the top limited liability company formation services you can consider. 

FAQ

Do I need an LLC for an online business?

Yes, you need an LLC for an online business if you intend to operate on a large scale continuously. When you decide to incorporate your business, building a limited liability company is the best solution to consider to separate your personal assets from the company itself, especially during legal disputes.

What state should I form my LLC in?

You should form your LLC in Delaware if you’re looking for a low-cost alternative. This state may offer lower rates in terms of the franchise, business income, and sales taxes, which can be advantageous for new business owners. They also have a specialized court assigned to expedite business disputes for asset protection, making it the best state for LLCs as per our research.

Our Top Pick Among the Best States to Form an LLC for an Internet Business: Delaware

Although some may think it’s better to incorporate their companies in their home state, some people who live in California or outside of the U.S. best suit a business-friendly state like Delaware. While Nevada and Wyoming offer good features, Delaware has exceeded our expectations. 

Aside from lower filing fees and business income taxes, one of the features that’s truly impressive is the state’s exclusive court. With a Delaware LLC, all of your tax and management disputes will be handled faster. After careful evaluation of its offerings, our team of experts unanimously hailed Delaware as the best state to form an LLC for an internet business.

Setting up a business in Illinois can be easy when you understand the important things on how to start a single-owned business in Illinois. Read next! 

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