Business owners often tend to wonder which U.S. state is the friendliest for their newly created LLCs. In this article we’re going to share some common knowledge of most popular and widely used states for Limited Liability Company (LLC) creation.
One of the main premises you should remember when forming an LLC is to know where you are located and where you plan to do business. This is important in order to avoid double taxation.
It is also worth remembering that you don’t have to do everything on your own. There are dozens of professional LLC creation services out there. And without a doubt one of the most popular ones is IncFile. In case you want to know if it’s worth it using them and how much will it cost — take a look at their review by LLCGuys: https://llcguys.com/reviews/incfile-review/.
So now, without further ado, let’s start and find out which TOP-6 states in U.S.A. are the best to start your LLC, considering costs and other aspects that these states provide.
1. Michigan
Michigan is a low-cost state that provides a Limited Liability Company structure and is also an excellent place to start a business. It is not subject to double taxation. Furthermore, the profits from the LLC business will be taxed directly on the owner’s tax return. In short, paying a single tax responsibility will assist the business in increasing funds for continued operation.
If you do decide to form an LLC in Michigan, it is necessary to know its fees. The Michigan LLC cost is $50, with a $25 annual obligation. This is just for filing the Articles of Organization. There are other associated costs you’ll need to know, but forming an LLC in this state is still relatively affordable as compared to other states.
2. Montana
In Montana, the cost of forming a Limited Liability Company is $70. It has a low filing fee and an annual payment of only $20; despite being a low-cost state, it is still regarded as one of the best places to form an LLC due to the submission method. People can submit their organization’s certificate online, which is more convenient and saves money on transportation.
Montana has been rated as one of the best states for entrepreneurs in the country and has one of the top ten highest rates of startups in the country. Not only does this state have a high rate of entrepreneurial activity, but it also has a high survival rate for these new businesses.
3. Utah
This state has a 0% corporate tax rate and a 0% individual income tax rate. It is advantageous for people who want to start a Limited Liability Company, because the responsibility of every business is to pay tax. With 0%, business owners can see it as an opportunity to save more money. Furthermore, the filing fee for an LLC in Utah is $70, with an annual payment of $20.
A Utah LLC offers easy maintenance without the need for required meetings, minutes, or the need to establish a board of directors.
4. Wyoming
In Wyoming, the cost of forming a Limited Liability Company begins at $100. The annual payment must be at least $50. More so, Wyoming does not have a personal income tax.
In short, the LLC cost in this particular state is relatively low, and it is still regarded as a good location for the business.
5. California
It isn’t one the cheapest states, but it’s definitely one the most popular ones. It’s no secret that California is the wealthiest state in US, so it tends to attract a lot of new businesses. The LLC set up costs are $75 and annual fee is a whopping $800 in California.
Record-Keeping Requirements: An LLC in CA has a lot less record-keeping or recording requirements than in other states.
So if you’re planning to start an LLC in California ― don’t forget that it’s full of opportunities, but its annual maintenance costs are relatively high as well.
Here’s a quick video explaining how you can form an LLC in California on your own.
6. Delaware
For a start, Delaware has some of the most business-friendly laws in the country. These laws are also regularly updated, meaning that they are always up to date and the state is at the forefront of business law developments.
Delaware State offers some big tax advantages for out-of-state businesses that are organized as Delaware LLCs. There is no income tax if the LLC does not do business in Delaware, there is also no sales tax if the LLC does not do business in the state, and there is also no tax on intangible income.
It is one of the only locations in the U.S. where you can remain relatively private. So don’t hesitate to start your LLC in Delaware.
Conclusion
Choosing an LLC is always a good choice when planning to start a business. It’s very flexible, tax-friendly, and relatively cheap compared to other legal forms of business in U.S.A. However, if you don’t know how to set up an LLC yourself, it is highly advisable to use an LLC formation service.
So, there you have it. These are the top 6 states that are most friendly for your LLC.
