Should I set up a Delaware LLC, for my business that operates in New York? Call K&A at 212-922-0005
Unless you happen to fall in one of a handful of categories, then the more proper state to form an LLC for your New York based business organization, would be a New York Limited Liability Company.
Why Delaware would usually not be the proper State to form your LLC?There are a whole number of potential drawbacks to having a Delaware LLC to own and/or operate your business, if you are neither living in Delaware nor are using Delaware as your principal place of business. Here are just some the potential drawbacks: i) Being subjected to two sets of potential regulations, ii) Since, Delaware LLC laws are often tailored to meet the needs of rather large businesses, it may be a way to overbearing regulatory framework for small start up type of business organizations, iii) Increased cost in terms of being subject to dual state taxation and dual State business registration type of fees.
When may make sense to set up a Delaware LLC?Having said the above, it is worth mentioning that there are a number of potential exceptions, which may make sense for a business organization to select Delaware as its state of incorporation/formation
A quick rundown of such exceptions are: i) Exposed to unique personal liability risks. ii) A somewhat large and/or inherently complex business organization that can practically take advantage of certain highly advance tax planning strategies. iii) Looking to be a public traded company within the foreseeable future.