When you start a trucking business, you are responsible for choosing a business structure. One structure you can select is a limited liability company, or LLC
Unlike some other business structures, you can form an LLC in any state, regardless of your physical business presence. With so many states to choose from, it can be difficult to determine to set up an llc.
An LLC is a US business structure that combines the limited liability protection of a corporation with the simplicity and pass-through taxation of a sole proprietorship. Limited Liability protects a business owner’s personal assets (e.g., car, house, and savings) in the event that a business is sued or defaults on a debt.
The main cost is the state filing fee, which ranges between $40 and $500, depending on your state.
There are two options for forming an LLC for your blogging business:
You can hire one of the best LLC services to set up an llc for a small fee
Or, you can use our free Form an LLC guide to do it yourself
LLCs are a simple and inexpensive way to protect your personal assets and save money on taxes.
You should form an LLC when there’s any risk involved in your business and/or when your business could benefit from tax options and increased credibility.
So, what’s the best state to start an LLC?
Recap of LLCs:
As you might already know, there are many types of business structures you can choose from as a business owner. The structure you select impacts your taxes and liabilities.
As a popular business structure, LLCs are flexible and combine elements of sole proprietorships or partnerships and corporations.
The owners of LLCs are considered members. LLCs can either be:
- Owners of an LLC have financial and legal protection similar to corporations without double taxation. Plus, owners are not responsible for business debts. If the business owes money and can’t pay, only their business assets are at risk.
LLCs use pass-through-taxation. Pass-through taxation means the business itself does not pay taxes. Instead, owners must report business income and pay taxes on their personal tax returns.
However, LLCs can elect to be treated and taxed as corporations.
Best state to start an LLC
Each state has different laws for LLCs. Some states are more strict, while others are more lenient. And, states might offer financial advantages and other perks for LLC formation.
Delaware takes one of the top spots as the best state to form LLC. More than 50% of all U.S. publicly-traded companies and roughly 63% of Fortune 500 companies are incorporated in Delaware.
Delaware has a reputation for being a business-friendly state and has a simplified filing process to help you get your LLC quickly up and running.Two major perks of creating an LLC in Delaware are the low fees and taxes. Delaware does not tax out-of-state income for foreign LLCs.
- Advantages of Delaware:
- Streamlined filing process
- Low filing fees
- Low franchise taxes
- No corporate income taxes for foreign LLCs taxed as corporations
One major perk of becoming an LLC in Nevada is the lack of taxes you have to pay. Nevada does not have corporate income, personal income, or franchise taxes. However, business owners must pay annual filing and business licence fees.
- Advantages of Nevada:
- No corporate or personal income taxes
- No franchise taxes
- Anonymity in public filings
- No information-sharing agreements with the IRS
Wyoming strives to be as business-friendly as possible. Reporting obligations for business owners are minimal. Like Nevada, there are no corporate income, personal income, or franchise taxes in Wyoming.
Advantages of Wyoming:
Minimal reporting obligations
No corporate or personal income taxes
No franchise taxes
Lifetime proxy option
South Dakota also has some advantages when it comes to different taxes.
Like Alaska, South Dakota does not have state income tax. Along with no state income tax, South Dakota also has a 0% corporate tax rate, making it a great place to start an LLC that is taxed as a corporation.
Advantages of South Dakota:
- No state income tax
No corporate tax rate (for LLCs treated as a corporation)
- Worst states to start an LLC
You’ve read about the best. Now it’s time to take a look at the worst. Take a look at the top five worst states to start an LLC in below:
- New Jersey
- New York
These states are not the most ideal states to start an LLC. Most of the above states have disadvantages like:
- High sales tax rates
- Startup fees for LLCs
- High state taxes
- More competition
- Additional reporting obligations
Keep in mind that you can still succeed as an in these states. It might just take additional time and money to do so.