Chapter 3: Entity Types
Across the board, it makes sense to start as an LLC and go from there. You can always convert your entity into an S Corp or C Corp, and even domesticate into another state if you choose to do so. Another thing to keep in mind is your state’s LLC filing and maintenance fees, which can vary wildly from state to state. In Arizona, an LLC filing fee is $85, and the business is good to go literally forever, no additional fees. Right next door in California, the filing fee is $75. However, they also require a yearly $800 LLC Tax, in addition to an LLC Fee proportional to your yearly revenue (for between $500,000 and $999,999 in revenue, the fee is $2,500). Fees like this can be a serious reason to look at filing your LLC in different states, although most states require an in-state primary address that isn’t a PO Box. If you have a friend that lives in a state with friendlier fees, consider getting them to allow you to register the business to their address!
One thing to keep in mind when conducting business in a state outside of the state your LLC is registered: Legally, LLC’s can do business anywhere in the United States. However, some states have unique paperwork or fees associated with doing business in their state if you’re an out of state LLC. For example, if you are an out of state LLC conducting business in California, you still have to pay the $800/yr LLC tax. For this reason it’s important to do some research on what the state-by-state requirements are when doing nationwide business.