The short answer is, yes.
But will that be the best choice for your business?
How do I know if it’s a good idea to form an LLC in a different state?
First, what exactly is an LLC? See our article here: “Should I Form an LLC?”
DOMESTIC VS. FOREIGN LLCs
A “domestic” LLC is one that’s registered and operates from its members’ home state.
A “foreign” LLC is one that was formed in a different state from the state where it operates.
If you’ve decided to form an LLC, you’ll need to decide which state to operate your business from.
Why Decide on a Domestic LLC?
Generally, you’ll want to form your LLC in the state where you live, because this is usually the least expensive, least complicated option.
You may be tempted by states other than your own that provide certain incentives for LLC’s. Forming your business in a “foreign” state does add an extra layer of complexity however, and requires you to comply with maintenance and tax demands in both states.
It’ll normally be simpler to form your business in your home and can make it easier to take advantage of any grants, incentives or opportunities your state may offer.
With a home state LLC, you’ll only have to keep track of one set of legal and tax requirements, and only have to pay one annual reporting fee.
If you decide to operate from your home state only, you’ll register a domestic LLC.
Why Decide on a Foreign LLC?
Some LLC’s may choose to operate from a state other than their own, or from more than one state.
They may have business locations in more than one state, or their business may have no fixed location.
Their LLC may be part of an industry that has more favorable laws in some states than in others, or they may want to expand into new states.
If you decide to conduct your LLC from another state in addition to (or instead of) your own, you’ll have to go through a foreign qualification process in your chosen state to determine if your LLC will qualify.
If it qualifies, you can then register your foreign LLC.
There are multiple factors to consider carefully before deciding whether to register a domestic or foreign LLC. Make sure to do thorough research before you begin your formation paperwork.
If you’d like professional advice in making this important decision for your LLC, McQuillan & Hohman Law is here for you. Schedule a consultation to find the most advantageous business entity for your business.