State of LLC registration for online business

by a searcher from The University of Chicago - Booth School of Business

Feb 25,2023

Hi all, first time business acquirer here. I have a question relating to state of LLC registration that I hope to get some clarity on. 

If I were looking to close on an online e-commerce or content business via asset sale, which state is best to set up my business LLC? I plan to live and operate out of my NY residence but have been hearing a lot about the benefits of Delaware/Wyoming/etc LLCs. If I register my LLC out of my home state (NY) and acquire the online business under that LLC, would I still end up needing to register a 2nd LLC in NY? 

Thanks in advance!

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5 comments

searcher from The University of Chicago - Booth School of Business

Thanks Aaron and Laura! I think I"m getting closer to the verdict that the home state might still be the best place to register this business...

02/27/2023 | like reply | 0 likes

professional from Villanova University - Villanova School of Business

Hi ^Searchfunder member‌! I look forward to discussing this further. There's a bit of a complex legal consideration here that we can discuss further on our call - the state of formation can be any state, however each state has different taxes, corporate laws, and regulations. Then, if there is a substantial connection with another state, the business will also need to register to do business in that state as well. Each state defines what that substantial nexus is - owning real estate almost always requires registration, paying employees can, receiving sales over a certain amount can also trigger it. When you file in the state of formation, you don't have to then register as well. So, it's a mixture of considering those different factors and weighing it with cost of administration and benefit.

02/27/2023 | like reply | 0 likes

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