Best Practices on When and Where to Form Your LLC

searcher profile

November 21, 2024

by a searcher from The Interdisciplinary Center Herzliya in San Jose, CA, USA

Hi all!

I'm a part-time searcher on my way to becoming a full-timer (in 2025!), and I'm looking for best practices on when and where to form my LLC.

I'm currently based in California and seeking business mostly in NYC, and I also plan to move there.

Should I wait to form the LLC until I find a business, or should I open it now? Is there a go-to place where it's best to open your LLC, regardless of where you reside or where the business is located?

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commentor profile
Reply by a professional
from University of Michigan in Detroit, MI, USA
Hi ^redacted‌, the LLC you form now could also be the LLC you later use as your acquisition vehicle. But it doesn't have to be. As a result, I would form an LLC in the state in which you live (or, if I read your post right, the state in which you are going to be living soon).

Ultimately, you're forming the LLC at this stage purely to limit liability. But be aware that you're submitting to jurisdiction in your LLC's home state. If you do end up getting sued, you won't want to have to fight in DE. You'll want to do it in a courthouse near you.

Once you have a business under LOI, you can revisit the best choice of acquisition vehicle with your attorney. Sure, this may lead to added expenses if you have to organize a new LLC (and potentially dissolve the old LLC). But in the grand scheme of your deal, these costs will be relatively minimal.

Just my 2 cents. If you want to discuss further. Feel free to reach out at redacted
commentor profile
Reply by a searcher
in Costa Mesa, CA, USA
I have been searching for ~ 6 months and have not yet formed an LLC, initially I thought that I would need to, to get started. The thing that I think has helped MORE than having an LLC is a custom email/ website for searching, this is a lot cheaper and has 0 downside today. Once I have my new biz under LOI, that is when I'll form the LLC as part of the whole closing process, working with the legal team. Just having a name to operate under as a searcher that is more than a gmail will be plenty to get started. Wait on forming the LLC until later. There is an argument for just setting one up now because it is so simple and you will have a real name to operate under, close it down later if you don't need it and need to re-form, but that feels a bit extra. Put another way, not having an LLC has not prevented me from submitting LOIs.

THAT Said! You should probably seek the advice of someone who has closed a deal :)
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