Unit 10 Preview and Introduction
Preview
This unit will cover the following topics:
- Predictability of the Court System
- Taxation
- Annual Fees
- Anonymity
- Miscellaneous
Introduction
As you saw in Unit 8, one does not need to do anything to formally organize a sole proprietorship or a general partnership. However, you also learned that LLCs and Corporations do require formal organization with the Department of State in whichever state is chosen as the organizational or incorporation state. Since a business does not necessarily have to organize in the state in which it is physically located, a choice exists. Keep in mind however, that many states require a business to file documentation within the state if it does business or owns property there.
You will need to research states’ statutes to ascertain whether there are advantages or disadvantages to organizing in the state. 📖 While this Inc. article is from 2016, it’s a quick read and interesting as we consider where to organize: “This is why Nevada is the Best Place for you to Start a Business” by Ilya Pozin
There are numerous considerations in selecting a jurisdiction:
- Predictability of the Court system (Delaware)
- Taxes (franchise, income, sales and use taxes)
- Formation requirements – annual fees
- Industry specific laws
- Business friendly laws
- Registered office/agent requirements
- Investor preferences
- Anonymity of owners