Forming an LLC in Delaware but members live in Idaho, California, and Texas


We recently formed a new LLC in the state of Delaware. The company is entirely web based and has 4 members located in 3 different states: California, Idaho, and Texas. The reason for forming in Delaware is because we were advised that Delaware in particular has very business friendly laws.

My question is legally do we have an obligation to obtain licenses or any other sort of permits in any other state as far as coducting business due to the geograhical lcoation of our members? Our mailing address is in Texas because thats where myself and one other member reside (its essentially a home office). We also plan on employing people on a freelance basis and these people would conceivable work from anywhere in the world but for example could be local to Texas or some other state. In this case would we need to obtain any permits or licenses in Texas, California, or Idaho?

Are there any other considerations we need to take into account in order to comply with any federal, state or local laws?

Follow up: Further reading has led me to beleive that we may need to register as a foreign entity in the other states we have members in, however, it sounds like this applies only if we are "doing business" in those states which is defined differently in each state. If we are an internet company conducting interstate business, does this apply? It seems that it would not.


asked Jul 16 '11 at 07:19
16 points
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1 Answer


I do not necessarily agree with the prior answer (I am a lawyer). Unfortunately this is a case of "it depends" and needing further information. It doesn't matter where the members of the LLC are located. Further it doesn't matter where the people you bring in to work on a freelance basis are located (assuming they are independent contractors). What matters (as you alluded to) is where you are doing business.

And yes, this varies from state to state. If, for instance you are making a lot of sales to California (assuming that you make sales, you didn't really specify what your company does, only that its web-based) then you would need to register in California.

Certainly if your principal place of business is in Texas you should be qualified there.

Also, I may not have advised you to register in DE because it really depends on your needs as to whether you should take the extra time and spend the extra money to incorporate in yet another state. Even though DE does have more business friendly corporate laws, unless you are really concerned about shareholder suits or protecting your managers, it may be a waste of funds to register in DE.

But since that is already done, all I can say is that you really need specific legal advice about your situation to figure out where you should incorporate, where you should register, etc.

Please note that this answer should NOT be taken as specific legal advice and that it is only for general discussion purposes.

answered Aug 18 '11 at 02:46
Peter Fischer
56 points

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