Choosing a US state for your company

Clients often begin with the question of where to form a US limited liability company. The useful way to approach it is administrative: where the company will be managed, where it will have people or premises, and which filing calendar the owners are prepared to keep.

Formation is not the same as tax residence

The state named on the certificate of formation is the company’s domestic state. It does not, by itself, decide where the company or its owners are taxed. Operations, management and the residence of the owners can each create filing or tax consequences that have nothing to do with the formation state. Those questions belong with an independent tax advisor in the relevant jurisdiction. Vanttax coordinates that conversation; we do not give the tax advice.

What actually differs between states

• The public record. States publish different amounts of information about a company and its organisers. That difference is part of the filing system of each state.
• The annual calendar. Annual reports, franchise filings and registered-agent arrangements differ in form and in due date.
• The registered agent. Every state in which the company is formed, or in which it later qualifies to do business, requires an agent who can receive official notices.
• The federal identification number. An Employer Identification Number is applied for with the federal tax authority. It is separate from the state filing.

A practical sequence

Describe where the company will actually operate and who will manage it. Ask the independent tax advisor which filings that pattern creates. Then choose the formation state with those facts in view. Vanttax can form the company in the state selected for the engagement, arrange the registered agent, support the identification-number application, and keep the annual calendar.

General information. This note is not legal, tax or investment advice, and it is not a recommendation of any particular state.