Places to Form a Limited Liability Company

Consider numerous financial, organizational and legal issues when forming a LLC. Factors to consider include the state in which you will be conducting business, requirements to establish an out-of-state entity, the costs of formation in your home state, annual fees charged for maintaining the entity and state or local tax issues.

It is also important to evaluate five other factors can differ between states:

• Can LLC members manage the LLC directly or must the limited liability company have a separate manager?
• Can the LLC merge with other types of organizations?
• Can LLC members be easily terminated or admitted?
• What provisions does a state impose on managers for negligence, malfeasance or misconduct?
• What are the standards for confidence, trust, and confidentiality?
• What are the rights of a member's creditors to claim a member's LLC ownership interests? This is a critical issue in the selection of a state for organization because state laws and court rulings are not necessarily consistent from state to state on this vital issue.

Taxation issues are also a paramount consideration because some states permit only multi-member LLCs to be taxed as a partnership while other single-member limited liability companies to self determine pass-through taxation.

New Mexico, Indiana and Oklahoma do not disclose the members or managers of their LLCs and entities formed in these states are anonymous. When used properly this factor can provide extraordinary privacy and in some cases even more than provisions provided by the State of Nevada.

Unlike the rules of corporate organizations, LLC law authorizes most of the details regarding the operation of the entity to be determined by its operating agreement, meaning you can decide with extreme latitude how the company is structured, providing great flexibility from a business, Asset Protection, and estate-planning perspective.

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