Regardless of what you’ve read online, most people should not be forming an LLC in Nevada. Excerpts below......
In order to best explain the reasons, let’s look at an example:
• Daniel is a resident of California
• He runs an online business from his home in California
• He reads online “Nevada is the best state to form an LLC”
• He forms an LLC in Nevada
Let’s discuss the issues that will arise in this situation.
Domestic LLC vs. Foreign LLC
If you form an LLC in your home state, this is called a “Domestic LLC”. Meaning, the LLC is domestic to that jurisdiction.
If you want this Domestic LLC to do business in another state (a different jurisdiction), you must register that LLC in the new state. Once that LLC is registered, it is known as a “Foreign LLC”.
It’s technically just one LLC. The LLC originally has authority to do business in its home state, since that’s where it was formed. And then it must file as a Foreign LLC in every state it wishes to do business.
So in our example, Daniel has only formed a Domestic LLC in Nevada.
Nevada LLC Illegally Doing Business
Since Daniel is running his business from his home in California, his Nevada LLC is illegally doing business in California
(or New Mexico, or wherever).
In order to avoid fines and penalties, he must register his Nevada LLC as a Foreign LLC in California.
CEO Petey - sometimes it takes a while, but reporting illegal businesses is something that does happen, and sometimes they take action.
