Question about Forming an LLC - Where should we incorporate?

Hello! I am trying to help a couple of friends start their own LLCs and I was wondering if I could get some advice. One of them is looking to form a non-profit in either New York or Massachusetts, and the other one wants to start a bakery in New York.

From people I've talked to and my own research, it seems that incorporating in Delaware not only costs less than MA or NY, but also has the benefit of having the Court of Chancery.

  • If we incorporate the bakery in Delaware, will that affect our ability to attain food-service related permits if we operate out of New York?

  • If the non-profit is incorporated in Delaware, and operates in either NY or MA, will that affect the process of filing for state-related tax exemptions?

I would appreciate any advice on this. Thank you!

Smallbusiness | 👁 494 | Posted 2018-03-07 | Share on Facebook | Twitter | Google+

| Modified: 2018-03-07 | Author:


swiftpants 2 years ago

Your home state. There are no advantages to foreign entities at your level.

keithcody 2 years ago

Www.wyomingCorporateServices.com They have a comparison between states that gives some info of Wyoming vs Nevada vs Delaware.

HLODor 2 years ago

Delaware is a great state if you are going to be issuing shares.

Big_Pimpin1 2 years ago


hansolosolosolo 2 years ago

If you register in Delaware, you're going to have to also register your business as a foreign entity in any state you do work in. So registering in Delaware is NOT a cost-saving measure. It's more a way for businesses who know they'll face litigation to get business-friendly Delaware laws and courts. In the case of a small business, it's almost always best to just register in your home operating state. Nobody here will be able to give you a precise answer tailored to your situation, of course, so it's always best to check with an attorney.

hansolosolosolo 2 years ago

$800 in CA...so you're not the worst (barely).

steveimke 2 years ago

You have to pay income taxes in the state where you earn income. So if you are a DE LLC you would still pay MA taxes in the income in addition to any federal taxes. You would also have to file a DE and MA state return also. You will have register as a foreign entity in MA too. I have found that foreign entity registrations cost more then domestic businesses in many states. What you have to understand it the reason you register with a SOS is that the business name is associated with a register agent. IF you get suited the sheriff heed to know the person to serve. Therefore you would also have to pay for a lawyer to be your register agent in DE if registered there and you could be th register agent in MA if you live there or hire an register agent that lives in the state.. Also if you were party to a lawsuit you would have to go to DE for all the court proceedings. Makes sense is you are large multinational corp but not for you. Here is a video I did that may help https://www.youtube.com/watch?v=ZOuor8USHBo

arxlight 2 years ago

I was in the same boat - MA fees are $500 IIRC. I was unsure about incorporating in Delaware so I just paid up. I'm not sure why they charge so much here.

adab1 2 years ago

It generally doesn't make sense to organize (you don't incorporate an LLC) anywhere other than where it's located. I'm not completely familiar with MA but you'll likely need to register a DE LLC there anyway (so you'll still be paying the MA fees). There are benefits to incorporating in DE but they're unlikely to apply to your business.

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