There are legal ("asset protection") reasons that many taxi companies have each car as its own LLC, or ski slopes register each slope as its own LLC. So if someone has a legal problem with one, and you can really show that you've been treating them separately in your bookkeeping and bank accounts, it's clear to the creditor that they're not going to be able to go after everything you've got.

Then of course as they grow there are reasons why you may want to sell one of your websites, but not the others, etc.

The reasons why to do it are vague and different for everyone, but to me, it's a "can't hurt" and "why not?" type decision.

You go to LegalZoom (or any similar service) and pay $400. They mail you a certificate you bring to your bank to open a separate account. Total spent: $400 and 30 minutes of your time.

California is an exception: They make you pay $800 per year to the state for each entity. Most states it's only $50 and some states (like New Mexico) you never need to renew or pay any annual fees at all. If you're a virtual company with no physical office, you can set up your LLC in any business-friendly state you want. (Delaware, Nevada, Wyoming, etc.)

Outside the U.S., British Virgin Islands is the quickest, cheapest, easiest place to do it: http://www.google.com/search?q=bvi+corporation

> If you're a virtual company with no physical office, > you can set up your LLC in any business-friendly state > you want. (Delaware, Nevada, Wyoming, etc.)

I think this issue is very interesting, and I would imagine it's important to a lot of HN readers. So let's say you're developing software (e.g. for a website, an iPhone app, etc.) by yourself out of your home. Are you really "doing business" in your home state?

Unless I'm misinterpreting the parent comment, the answer is no. But if anything, it seems the opposing view may be more common. Specifically, many people say yes, wherever you're doing most of your work/programming/typing/etc. is where the business has "nexus". And if you're deploying a website, then there's the issue of the location of your datacenter, which could very well be in a different state.

What are people's experiences and thoughts on this?

Setting up an LLC in Wyoming will not shield your from tax issues in your home state (California or otherwise).

Those LLCs are such a headhache from a tax point of view, plus they depend so much on state and federal regulations. Good luck doing business internationally as well.

Why do you think we invented the 100% virtual company (http://fairsoftware.net)?

Granted, the liability part is not as strong as a clean LLC, but you are shielded from your customers, and you can work with pretty much anyone worldwide without having to worry about any paperwork at all.

In general you're likely to have to file taxes/annual reports in the state you live/work in, as well as the state the business is incorporated in.

Incorporation in Delaware or another random state is a needless hassle and expense for small businesses. Incorporate in your home state. When you get big enough that you have several accountants and lawyers employed by your company, they can tell you the benefits of shifting the incorporation to another state. Until then... it's a waste. Premature optimization, as they say.

I have to disagree, from experience. CD Baby was a Nevada corporation, though I was set up in New York when I started and Oregon when I left. I never had to file anything in Nevada, and there were no "needless" hassles or expenses.

Someone has to be the "resident agent" for the corporation. It's no harder to incorporate in Wyoming or Delaware than it is in Ohio or Arizona. The expense really is only $100-$300 a year to have a resident agent, and I've found it very worth it.

I'd rather have the LLC/corporation domiciled in a state like Wyoming, Delaware, or Nevada so that I'm free to be location-agnostic with where I choose to live or work. If you incorporate in California or New York you're going to really regret it when you move to Texas or London in a couple years.

Not all LLC's are created equal. If you're going to incorporate in your home state, make sure your state has a "strong" LLC.

NY has high costs as well: You have to issue public notice when creating a new LLC.

I've found that Earth Class Mail's Beaverton, OR street address (which has no add'l cost past the standard ECM fees) works fantastic. The Oregon SoS website lets you register an LLC online on the cheap, less than $100.

Does anyone know what is the Canadian equivalent?

> Outside the U.S., British Virgin Islands is the quickest, cheapest, easiest place to do it:

Please if anybody has any experience setting up a BVI please share here.

This is good stuff.

I've used Trident Trust : http://tridenttrust.com/jurisdiction_tbvi_companies.html - but I get the impression that all of these companies are similar : http://www.offshorebvi.com

1. Sign up and pay (about $1000 USD) 2. They incorporate same day 3. Next day they FedEx you your documents 4. Bring those documents to your bank to set up an account 5. .. ? .. 6. Profit! ;-) 7. Once a year you renew your agent fee with the incorporation company. Another $400.

That's really all there is to it. I don't know how it works out from a tax point of view outside the U.S., but in the U.S. it's just treated like a corporation in any state. I pay U.S. taxes on my income, worldwide, so there's no tax benefit to a BVI Corp for a U.S. citizen.

But I've heard there are big advantages if you're not a U.S. citizen. Since you're only taxed on local-earned income and your BVI company is not a local company, etc. That's all I know.

You the man sivers!

Gosh, I wish we had the LLC option here in Norway. The only "real" similar alternative we have is an AS (Aksjeselskap, "stock company"), which requires a minimum of 100 000 NOK in company capital (about 16 000 USD).

The other viable option is a Norwegian foreign registered company (NUF). This means that I can create a company in a different country (e.g. England), and then register a company branch here in Norway. The problem is that these companies have gotten a bad rep in Norway, so you might find yourself in a bad position with the banks, as well as your customers.

Yep, this is one of the very real problems with "Europe", which, by and large (and with a few exceptions like the UK and Ireland) makes it very expensive to start a company. It seems stupid to me... I mean, go ahead and slap high taxes on profits if that's what you choose as a society/country, but at least wait until there are profits to tax before you ask for a lot of money.

Sure, I know the capital can theoretically be invested in your company, but 16K is potentially a lot for a web business...

Incidentally, I'm curious about the foreign company option. Any other Europeans want to comment on how that works out in your country? I'm vaguely curious if I could link one up in Europe with DedaSys LLC without spending a fortune in bureaucracy...

I am glad you put "Europe" in quotes, because it's a diverse place etc.etc. That said, European unification has made possible a few new options for startup companies. There is now a 'European Limited Company' form, and it is also possible to register a company in any country from another country. For that last option the UK Ltd. route is very popular. Here in Belgium there are certain restrictions to starting up a limited company (minimum starting capital, diploma or experience needed, no bankruptcy in last 10 years etc.) which don't apply to UK limited companies. Apparently it's possible to start a UK limited company and conduct business in a different country, paying taxes in that country etc., as long as you have a return filed with Companies House and pay the yearly fee. EDIT: Just noticed the grandparent already mentioned this second option, oops.

How about an Irish Corp? They have a low tax rate. 12.5% and tax treaties with a bunch of countries. This should allow you to get dividends or capital gains at a more favorable rate. Tons of high tech companies have set up their European operations hqs there, using it as their nexus for all Euro profits.

Yeah, but remember that the 100.000 NOK only needs to be in the bank long enough for the auditor to verify its presence for Brønnøysund. It's not uncommon to set up a chain of companies, owning each other, using the same 100.000 for all of them, just transferring it along.

Of course you'll still be liable for the whole amount in case the company goes bankrupt...

Each business should have its own company. Are these web sites separate businesses? Or are they different faces of the same business?

I have five web sites, but two businesses. Each business has and is its own presence and personality. Each web site clearly belongs to exactly one of those businesses.

Seems like the 'transaction costs' (registering the LLC, bank account, etc...) could add up unless the sites really are independent, perhaps with different people working on them.

A series LLC is another option: http://en.wikipedia.org/wiki/Series_LLC

is this the same as what was discussed here: http://farm4.static.flickr.com/3613/3324835985_f8339dd2cf.jp...

here's the HN link: http://news.ycombinator.com/item?id=504151