I run a solo digital marketing consultancy (just me, no plans to hire). My accountant suggested forming an LLC in Delaware because of the 'business-friendly' reputation, but the franchise tax and registered agent fees seem like overkill for a one-man show. Am I overthinking this? Should I just stick with my home state?
LLC formation
Does Delaware make sense if you're running a one-person business?
Delaware for a solo consultant is almost always a waste of money. You're paying extra for legal precedents and a chancery court you'll never use. Stick with your home state. Your accountant might be moonlighting as a Delaware tourism rep.
I looked into this last year for my freelance writing biz. The annual DE franchise tax alone was like $300, plus agent fees. My home state was $50. Unless you're bringng in investors or going public, it's pointless.
Not entirely true. Delaware does offer strong privacy protections and a separate court system that can be useful if you ever get sued. But for a one-person shop with no outside investors? Probably not worth the hassle. What does your home state charge?
Home state is Nevada, which is also pretty business-friendly. Franchise tax is lower and no state income tax. That's why I'm confused why my accountant pushed Delaware.
Nevada? Then your accountant is definitely wrong. Nevada is basically Delaware lite for small businesses. Unless you're trying to avoid paying your taxes altogether, which I don't recommend.
Could be the accountant just has a template they use for everyone. I've seen that. They set up DE LLCs for all clients because it's what they know. Ask them directly why DE specifically for your situation. If they cant give a concrete reason beyond 'reputation,' ignore them.
also, if you're a single-member LLC, Delaware requires you to pay an annual franchise tax of $300 minimum, plus registered agent. In Nevada, it's $150 annual list fee, and you can be your own registered agent. That's a no-brainer.
Wait, Nevada lets you be your own registered agent? I thought you needed a physical address there. If you're out of state, you still need a agent. But if OP is in NV, then yeah, easy.
I am in NV, so I can be my own agent. Thanks, everyone. I'll push back on the accountant and probably just file in NV. Saves me a few hundred bucks a year.