What are the benefits of a incorporating vs. operating an LLC?

Question

I'm in California, but have been told to Incorporate or become an LLC in Nevada.

Is there any reason to do this out of state, other than cheaper renewal fees?

Answer 1

Until recently Delaware offered so many benefits to businesses that an overwhelming number of U.S. businesses were formed there. Nevada is one of the states challenging Delaware's distinction in that capacity.

Because this is an area of law that is both nuanced and subject to rapid changes, I won't provide a digest of the relative merits of each domicile. The states that are actively courting this business do a good job of touting their relative advantages, so an internet search can provide that. E.g., presently:

• http://www.bizfilings.com/learn/incorporate-delaware-nevada.aspx
• https://www.incnow.com/delaware-vs-nevada/
• https://www.delawareinc.com/llc/advantages-of-llc/

Answer 2

The specific law you incorporate under will determine the rights and liabilities involved. That said, as a general rule, the major practical difference between a C corporation and an LLC is that a C corp will pay corporate income taxes, while and LLC has partnership-style pass-through taxation.