LLC or Incorporate?

[devvon2]

Hello,

Thanks in advance for your expert advice. I am in the process of forming a clothing design company. I haven't chosen a state for the business yet, because i am looking avoid some states sizable franchise tax, since i am on a challenged budget for the first year. I have total flexibility as far as where to establish my business. (I am a resident of CA, if that makes a difference). Oh, another detail: I will be outsourcing material and labor to Italy and storing finished goods there (if that's a problem with saving $, then i will store state-side).

On a limited budget, do i form an LLC or S corp? and which state most friendly to saving start-ups money/taxes/etc?

I appreciated you time and advice.

Devvon2

 

[Michael Wechsler]

Hello,

Thanks in advance for your expert advice. I am in the process of forming a clothing design company. I haven't chosen a state for the business yet, because i am looking avoid some states sizable franchise tax, since i am on a challenged budget for the first year. I have total flexibility as far as where to establish my business. (I am a resident of CA, if that makes a difference). Oh, another detail: I will be outsourcing material and labor to Italy and storing finished goods there (if that's a problem with saving $, then i will store state-side).

On a limited budget, do i form an LLC or S corp? and which state most friendly to saving start-ups money/taxes/etc?

It sounds like you've got a lot of needs here and perhaps this forum might not be able to supply all the answers. Just a few questions:

- How many investors/shareholders are you anticipating having?

- If your business is in a state other than the one you are incorporating in you will need to pay for a registered agent within that state. Delaware is frequently used (depending upon the type of corporate formation) for a variety of reasons.

- I don't know what issues you may have with regard to licensing in your state and a corporate entity that may be outside your place of business.

- Depending upon the state, I have found that an LLC can be more tax beneficial fora variety of reasons, including issues of city taxes.

 

[devvon2]

On a limited budget, do i form an LLC or S corp? and which state most friendly to sav

Thanks so much for your reply to my multitude of challenging questions. to answer some of your questions:

- How many investors/shareholders are you anticipating having?

• for the first year i will be the only investor. the second year i will be seeking shareholders/limited partners to help capital need for growth.

- If your business is in a state other than the one you are incorporating in you will need to pay for a registered agent within that state. Delaware is frequently used (depending upon the type of corporate formation) for a variety of reasons.

• • I live in CA, but i can incorp/LLC any state (hopefully the state with most benefit). I am now looking at Delaware or Nevada. But i don't know if i need to incorp internationally, since i will be doing all manufacturing in Italy and shipping to various parts of the world. do you have any experience on this type of issue?
  - I don't know what issues you may have with regard to licensing in your state and a corporate entity that may be outside your place of business.
  
  • well, i will have to work this one out myself. thanks
  - Depending upon the state, I have found that an LLC can be more tax beneficial fora variety of reasons, including issues of city taxes
  • do you know if this is the case with CA, NV, DE?
  
  Again, thanks so much for your time and intellectual energy.
  
  Devvon2