Best Practices on When and Where to Form Your LLC

November 21, 2024

by a searcher from The Interdisciplinary Center Herzliya in San Jose, CA, USA

Hi all!

I'm a part-time searcher on my way to becoming a full-timer (in 2025!), and I'm looking for best practices on when and where to form my LLC.

I'm currently based in California and seeking business mostly in NYC, and I also plan to move there.

Should I wait to form the LLC until I find a business, or should I open it now? Is there a go-to place where it's best to open your LLC, regardless of where you reside or where the business is located?

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Reply by a searcher
from Cornell University in Jersey City, NJ, USA

something that no one has mentioned about having an LLC is that you can deduct expenses you have incurred during your search. If you wait until is needed you may have lost the opportunity to expense cost of memberships, gas (in case you drive to meet owners), legal fees, etc

Reply by a professional
from University of Michigan in Detroit, MI, USA

Hi ^redacted‌, the LLC you form now could also be the LLC you later use as your acquisition vehicle. But it doesn't have to be. As a result, I would form an LLC in the state in which you live (or, if I read your post right, the state in which you are going to be living soon).

Ultimately, you're forming the LLC at this stage purely to limit liability. But be aware that you're submitting to jurisdiction in your LLC's home state. If you do end up getting sued, you won't want to have to fight in DE. You'll want to do it in a courthouse near you.

Once you have a business under LOI, you can revisit the best choice of acquisition vehicle with your attorney. Sure, this may lead to added expenses if you have to organize a new LLC (and potentially dissolve the old LLC). But in the grand scheme of your deal, these costs will be relatively minimal.

Just my 2 cents. If you want to discuss further. Feel free to reach out at redacted

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