How Do I Form an LLC in Various States?

By Rudri Bhatt Patel

How Do I Form an LLC in Various States?

By Rudri Bhatt Patel

Setting up a limited liability company (LLC) is easy to do in any state. Many businesses choose to form as an LLC because it offers beneficial tax options and protects an individual's personal assets from being collected in a lawsuit.

You can form an LLC in any state regardless of where you are based; however, it likely makes most sense to form an LLC in the state where you live. Many businesses form LLCs across multiple states, but you must be aware of each state's requirements for establishing and maintaining an LLC.

Here is how a business can effectively establish LLCs in multiple states.

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Deciding Where to Form Your LLC

Before you decide to form multiple LLCs across the country, you must decide which state will be the “home" (and first) state of your business.

Here are some factors to consider when deciding on your LLC's home state:

  • Do the majority of your transactions, as well as operations, occur in this state?
  • What are the requirements to form an LLC in this state? How quickly will the state allow your LLC to be up and running?
  • What taxes and fees do you need to consider? Some states, like California, impose an annual $800 franchise tax on all LLCs.
  • What additional state permits and licenses are required?
  • Is the state considered pro-business?
  • What are the requirements to maintain your LLC in this state?

Registering Your LLC

Several steps are required to register your LLC in any state. Generally, the requirements are to:

  • Choose a business name for your LLC and determine whether that name is available in your state.
  • Appoint a registered agent.
  • Draft articles of organization and file them with the state.
  • Create an operating agreement.
  • Obtain your Employee Identification Number (EIN).
  • Research permits, licenses, and tax information specific to your state.
  • Maintain your LLC by complying with annual reporting requirements.

Deciding if You Need Additional LLCs

Once you decide on your LLC's “home" state and register it, you can start setting up additional LLCs in other states. If your LLC has a significant amount of its small business operations in a place other than the home state, you must register the LLC in that state. This doesn't require creating a new LLC, but you must gain permission from the new state to operate your business.

Registering your LLC in a state other than the home state is called "foreign qualification," and the LLC set up in that state is considered a foreign LLC. Different states define what amount of business activities will require an LLC to register as a foreign LLC. Generally, the factors that require a business to register as a foreign LLC are:

  • Your business has offices, warehouses, or retail stores in the state.
  • You have employees in the state.
  • You hold regular, in-person meetings with clients, investors, or managers in the state.
  • Your business has a license in the state.

If your LLC has only a small connection to the state—like a bank account—it won't be enough to require registering a foreign LLC. The exceptions differ from state to state, but generally a nominal connection is not enough to require registration.

Registering a Foreign LLC

The process to register for a foreign LLC is similar to establishing a new LLC in your home state. Each state may have different requirements, but generally a business must comply with the following:

  • Conduct a name search: Determine whether your business name is taken. If it is, you may need to establish a “doing business as" (DBA) or fictitious name. It is possible for an LLC to have several DBA names. However, a DBA isn't a business entity and doesn't offer any legal protection.
  • Appoint a registered agent: registered agent is a person who will receive legal and other documents on behalf of your business, such as subpoenas, regulatory and tax notices, and correspondence.
  • File an application for a foreign LLC: Some states require a certificate of good standing to verify that you are legally authorized to operate.

 

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.