Living & Business based in CA - Which State is best for LLC?

[Gary Theisen]

Hi all,

Here is my information pertaining to my question of which state is the best to start an LLC in:

• The business will be selling dried fruit.
• The location of preparation, packaging and shipping of the product is in California (at least initially, run from out of my house).
• I will be the only employee (most likely for several years anyway).
• Business will be conducted online only, selling to anyone living in the U.S., Canada or Mexico (initially limited to these county's due to shipping scales of economy, to be expanded elsewhere if I can get shipping costs down).

I ask this question for the purposes of:

• Paying the lowest LLC start up and recurring costs related to the LLC.
• Having the least amount of paperwork required to start, and maintain the LLC.
• Having the most comprehensive protection for such a business (& of course, for me the individual owner of the LLC).

Aside from the LLC, I will get a CA class a cottage food permit and of course pay CA taxes. This question isn't regarding trying to get out of paying those.

With that in mind, would filling the LLC in Wyoming, Delaware or Nevada be more advantageous to filing in California?

[Eamonn McElroy]

Regardless of which state you organize the LLC in, if you're doing business in California (which based on the fact pattern laid out above you would be), you'd be required to register with the California Secretary of State as a foreign LLC and pay annual filing fees. So now you're paying annual business filing fees in at least two states and have two annual reports.

Unless there is a legal reason for you to organize the LLC in another state, based on your facts and circumstances its best to organize the LLC in California from an administrative and compliance perspective, as you're not going to be able to avoid the CA $800 annual LLC tax, nor the CA Form 568 obligation either way.