Business owners often tend to wonder which US state is the most friendly for their newly created LLCs. In this article we’re going to share some common knowledge of the most popular and widely used states for LLC creation. One of the main premises you should remember when forming an LLC is to know where you are located and where you plan to do business. This is important in order to avoid double taxation.
So, without further ado, let’s start and find out which TOP-6 states in the USA are the best to start your LLC considering costs and other aspects that these states provide.
Table of Contents
1. Michigan
Michigan is a low-cost state that provides a Limited Liability Company structure and is also an excellent place to start a business. It is not subject to double taxation. Furthermore, the profits from the LLC business will be taxed directly on the owner’s tax return. In short, paying a single tax responsibility will assist the business in increasing funds for continued operation.
If you do decide to form an LLC in Michigan, it is necessary to know its fees. The Michigan LLC cost is $50, with a $25 annual obligation. This is just for filing the Articles of Organization. There are other associated costs you’ll need to know, but forming an LLC in this state is still relatively affordable as compared to other states.
2. Montana
In Montana, the cost of forming a Limited Liability Company is $70. It has a low filing fee and an annual payment of only $20; despite being a low-cost state, it is still regarded as one of the best places to form an LLC due to the submission method. People can submit their organization’s certificate online, which is more convenient and saves money on transportation.
Montana has been rated as one of the best states for entrepreneurs in the country and has one of the top ten highest rates of startups in the country. Not only does this state have a high rate of entrepreneurial activity but also a high survival rate for these new businesses.
3. Utah
This state has a 0% corporate tax rate and a 0% individual income tax rate. It is advantageous for people who want to start a Limited Liability Company because the responsibility of every business is to pay tax. With 0%, business owners can see it as an opportunity to save more money. Furthermore, the filing fee for an LLC in Utah is $70, with an annual payment of $20.
A Utah LLC offers easy maintenance without the need for required meetings, minutes, or the need to establish a board of directors.
4. Wyoming
In Wyoming, the cost of forming a Limited Liability Company begins at $100. The annual payment must be at least $50. More so, Wyoming does not have a personal income tax.
In short, the LLC cost in this particular estate is relatively low, and it is still regarded as a good location for the business.
5. California
It isn’t one the cheapest states, but it’s definitely one the most popular ones. It’s no secret that California is the wealthiest state in the US, so it tends to attract a lot of new businesses. The LLC set up costs are $75 and annual fee is a whopping $800 in California.
Record-Keeping Requirements: An LLC In CA has a lot less record-keeping or recording requirements than in other states.
So if you’re planning to start an LLC in California – don’t forget that it’s full of opportunities, but it’s annual maintenance costs are relatively high as well.
Here’s a quick video explaining how you can form an LLC in California (LLC California) on your own:
6. Delaware
For a start, Delaware has some of the most business-friendly laws in the country. These laws are also regularly updated, meaning that they are always up to date and the state is at the forefront of business law developments.
Delaware state offers some big tax advantages for out of state businesses that are organized as Delaware LLCs. There is no income tax if the LLC does not do business in Delaware, there is also no sales tax if the LLC does not do business in the state and there is also no tax on intangible income.
It is one of the only locations in the US where you can remain relatively private.
Conclusion
Choosing an LLC is always a good choice when planning to start a business. It’s very flexible, tax-friendly and relatively cheap compared to other legal forms of business in the USA. However, if you don’t know how to set up an LLC yourself, it is highly advisable to use an LLC formation service. You can find some of the best LLC services online reviewed on LLCguys.com.
So, there you have it. These are the top-6 states that are most friendly for your LLC.
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