Don’t miss this key business formation criteria when starting or expanding your company.
When you started or expanding your business, what criteria did you use for selecting a location? Did you opt for a “business friendly” state? Because each state offers different taxes, fees, credits and incentives, it can be hard to know how to choose the best fit for your company.
One important idea to keep in mind is that selecting a state of incorporation for your company doesn’t only come down to taxes, fees, credits and incentives. It’s also important to think about where your business will operate and have nexus. Although “business friendly” states certainly sound appealing, they aren’t always the best choice for entrepreneurs – especially small business owners.
A good principle to keep in mind is that if your business has five or fewer shareholders it may be best to form a corporation or LLC in your home state – where you live and will be conducting business.
With that in mind, here are 6 key business formation criteria to keep in mind:
1. Initial fees. Some states require one-time formation fees for new corporations or LLCs. In some states, like Arkansas, Colorado, Oklahoma and Mississippi, this fee is as low as $50. For others, like Texas and Connecticut, it’s as high as $310-$455. Fortunately, this initial fee shouldn’t have a long-term impact on your company. Continue reading