Forming Your Business Out-of-state
You are probably familiar with companies that will form a corporation or LLC out-of-state. While this is certainly
legal, you should be aware of some of the downsides:
- Officially, you are required to register as a "foreign" corporation or LLC with the Nevada Secretary of State. Foreign corporations and LLCs must pay the same taxes as domestic
businesses, so you will not save any taxes.
- You must allocate earnings according to the state where the revenue was earned, which will result in more complex tax returns and increased tax preparation fees.
- If you decide not to voluntarily register with the Nevada Secretary of State, you will be required to
register when you hire employees or sell items.
- Foreign corporations and LLCs cannot get Small Business Certification to sell to the State.
- It violates the "think globally, buy locally" mantra. When companies pay taxes and fees to other states it
places a higher burden on everyone else.