Q: Can I form my LLC in a state other than where I live?

-Interested Entrepreneur

A: Dear Interested

With few exceptions, you can form a limited liability company (LLC) in whatever state you choose. Maybe you’ve heard that states like Delaware, Wyoming, and Nevada offer legal and tax advantages—and this can be true.

But whether these advantages apply to your company depends on the type of operation you run as well as where and how you do business.

If your LLC conducts business in a particular state, it must register with that state and pay its filing fees and taxes, regardless of where you’re incorporated. For example, if you run a computer repair store in Florida that mainly caters to local clients, it likely wouldn’t make sense to form your LLC in another state, since you would have to register in Florida anyway.

To this end, small LLCs that operate only in one state typically incorporate in that state for ease and convenience.

However, in the digital age, determining what constitutes “conducting business” isn’t always clear. If you have a storefront or office in a specific state, you’ll generally need to register there. But if you’re a consultant, who does most of your work online, with no physical presence in a specific state, you could file your LLC in Wyoming—which is the most private and inexpensive— and not need to register anywhere else, provided you headquarter your office in Wyoming.

In such cases, forming your LLC outside of your home state may be advantageous. But before you do so, you should consult with a Family Business Lawyer® to determine the best place to set up your business.