You can form your LLC or corporation in any state, and Delaware is the usual example. Forming elsewhere doesn’t change where you do business, and that state’s rules still apply.
How it works
- Domestic and foreign. The state where you form treats the business as domestic. Every other state where you operate treats it as foreign.
- Foreign qualification. To operate in another state, you register there, usually with a Certificate of Authority. Many states also ask for a Certificate of Good Standing from your formation state.
- Two sets of costs. Foreign-qualified businesses typically pay taxes and annual report fees in both states, and each state sets its own fees.
Do this
- Start with where you’ll operate. That state’s registration, taxes and licenses apply wherever you form. Your state’s Register your business page covers them, including what an out-of-state company must file.
- Add up both states’ costs before you decide: formation, foreign registration, and each state’s yearly taxes and reports.
- List every state you’ll do business in. Each one may need its own foreign qualification.
- Ask an attorney or CPA if investors, several states or a specific legal reason are driving the choice.
This step, state by state
Common questions
Should I form my LLC in Delaware?
Forming there doesn't replace registering in the state where you operate, so a business that works in one state usually ends up paying both. If investors or a specific legal reason are pushing you toward Delaware, ask an attorney.
What is foreign qualification?
Registering a business formed in one state to operate in another. The state where you formed calls the business domestic; every other state calls it foreign.
Do I pay fees in both states?
Typically, yes. A foreign-qualified business pays taxes and annual report fees in its state of formation and in each state where it's registered.