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I am in the process of starting a new business. It will be

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I am in the process of starting a new business. It will be an online business with customers around the U.S. I will be running the business out of my home office, so there will be no physical store front in Minnesota. I currently live in Minnesota. I will be registering the business as an LLC. I am in the process of deciding whether to form the LLC in Nevada or in Minnesota. My question is below:

1. If I do form a Nevada corporation and all of the business is done online will I still have to pay Minnesota state income tax in the end if the income eventually passes through to me or not?

Welcome to Just Answer. I am here to help you resolve your tax and finance concerns. Please feel free to ask anytime you need extra help.


I recommend setting up the LLC in Minnesota. The reasoning is as follows:


1.You live and will be working in Minnesota. This gives nexus (a substantial physical presence) in Minnesota.

2.Having nexus in Minnesota your entity will be required to file returns and pay taxes to Minnesota. You as a Minnesota resident will also be required to file returns and pay taxes in Minnesota.


A Nevada LLC will not change this other than to:

1.Add a second set of state returns to prepare and file.

2.Cost you a resident agent fee each year.


In simple terms, set up your business in the state in which it will really be located and operating. Additionally, I would look into the cost of a corporation as compared to an LLC. Both offer the same legal protections but, due to publication requirements (the costs vary), a corporation can be less expensive.

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