Legal Question in Business Law in New York

As a Franchise Attorney I advise you to speak with a CPA for tax advice. Many people form entities in Nevada in a vain attempt to escape payment of their state's (in this case NY) taxes. Doesn't work; If you live in NY, conduct business from NY, buy the products you sell in NY, your entity will end up paying NY taxes. Consult with a good business or franchise attorney in your area for specific advice.

Mr. Franchise - Kevin B. Murphy, B.S., M.B.A., J.D.

Franchise Foundations, a Professional Corporation

The so-called advantages of forming a business entity in NV or DE are a myth unless you are a Fortune 500 company. For the rest of us, the generally correct answer is: form in your own state.

My colleagues are correct. In fact, there are four additional disadvantages to forming a Nevada company:

1) if you form a LLC you will still be obligated to publish in NY. The publishing rates for foreign companies in NY are higher than domestic companies.

2) If you have legal disputes you may be dragged to court in Nevada. Being away from your home turf is not a good idea for a small business.

3) Any problems you may have would need to be handled by a Nevada attorney. Finding one in NYC is not easy and working remotely with one you never met is not advisable.

4) You may not need to pay corp taxes in Nevada, nonetheless you will likely have to file a tax return in Nevada and in your home state, which would make your tax work more expensive.

I again concur with my colleagues that you should seek the advice of an attorney sooner rather than later.

Roman R. Fichman, Esq.

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Disclaimer: This posting has been written for educational purposes only and was not meant to be legal advice and should not be construed as legal advice. You should always consult an attorney admitted to practice in your jurisdiction for specific advice.

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