{3 minutes to read}  I recently met with two people who wanted to start a consulting business together, but they lived in different states. One question I answered among many was — in which state should they form an LLC? The first answer that I gave them was: You know what? It doesn't matter. Why do I say that? Unless you're looking for specific asset protection strategies or are forming a trust that must comply with specific state laws, your LLC does not need to be registered in a state other than where you live.

There are some exceptions, but for the most part, all the fanfare about forming in Nevada, Wyoming, or other states is mostly just fanfare. So, what do you do if you are creating a business with someone who lives in another state? Well, I asked some questions of these two people, and I learned that one of them would be doing most of the work to form the entity. Based upon that, the best place to create the entity would be the state where that person lives. It is easier to get things done with state agencies in the state in which you live.

Now, what does that mean for the other owner of this LLC? To conduct business on behalf of that LLC, the person who lives in a state other than the one where they formed the entity must register the LLC as a foreign entity in the state where they live. The owners created the entity in Maryland, but because one of the owners lived in North Carolina and will regularly conduct business on behalf of the LLC in North Carolina, the owners need to go to that state and register that LLC to do business there. It doesn't have to be a complicated analysis, and, again, the best way to handle this is to look at the underlying work each person will be doing and determine where it would be most efficient to form that entity.

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