I see a lot of dumb llc formation mistakes. Maybe more than most people because I occasionally teach a graduate tax class on LLC formation.
Some of the mistakes are made by entrepreneurs and investors trying to save money on accountants and attorney fees. And I guess thats okay–albeit penny-wise and pound-foolish.
But you know what really irks me? Some of these mistakesin fact, most of themare made by attorneys and paralegal services Professionals who should know better.
But enough whining. Without further fanfare, here are the three dumbest mistakes that I see people make again, and again, and again.
Mistake #1: Forgetting about Foreign LLC Registration Rules
Read those tempting advertisements for Delaware or Nevada limited liability companies? The advertisements sound pretty good, but most small businesses shouldnt use out-of-state llcs or for that matter out-of-state corporations.
Heres why: If youre doing in business in, say, New York, youre not going to be able to avoid state taxes by forming your llc in, say, Nevada. The tax and corporation laws in your state will require you to register your...
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