Is there a reason why I should create my LLC in Delaware instead of my home state?

UPDATED: Feb 24, 2012

Advertiser Disclosure

It’s all about you. We want to help you make the right legal decisions.

We strive to help you make confident insurance and legal decisions. Finding trusted and reliable insurance quotes and legal advice should be easy. This doesn’t influence our content. Our opinions are our own.

UPDATED: Feb 24, 2012Fact Checked

Get Legal Help Today

Compare Quotes From Top Companies and Save

secured lock Secured with SHA-256 Encryption

Is there a reason why I should create my LLC in Delaware instead of my home state?

I’ve been told that there are tax breaks for creating my LLC in Delaware. Wouldn’t I still pay my taxes to my home state?

Asked on February 24, 2012 under Business Law, Pennsylvania


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

Taxes paid have nothing to do with state of formation of an LLC (or incorporation of a corporation). Taxes are based upon nexus, which is a fancy way of saying "connection"--a business pays taxes where it has a presence or connection. For example: you have a LLC for a computer sales, repair, and consulting business in New York, say. The business is incorporated in DE, but is located in NY and all your sales and work are in  NY, too. You will pay income and sales tax in NY.

To understand the full tax implications of your type of business and location, you should speak with a CPA.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

Get Legal Help Today

Find the right lawyer for your legal issue.

secured lock Secured with SHA-256 Encryption