I am forming a business wherein I will do freelance software development. All I need is myself and a computer, so I can be location independent. My hometown (in Florida) is expensive when it comes to starting a business so I was going to form a LLC in Delaware instead. Do I need to register as a foreign business operating in Florida?
Florida statute 608.501 §1 states that a foreign LLC cannot conduct business within Florida until it files all the necessary paperwork, but 608.501 §2i states that conducting interstate business is not considered conducting business within Florida. Furthermore, 608.501 §2c states that foreign LLCs maintaining bank accounts in Florida does not constitute conducting business either.
So in a nutshell, I guess it means if I incorporate in Delaware, as long as I do not have an office in Florida, then I do not have to register in the state as a foreign business?
I’m not licensed to practice law in Florida, but I can tell you that in general, the rule in most states is that if a company has any employees, assets, or facilities located there, it must qualify to do business in that state as a “foreign” (out-of-state) corporation.
In my view, if you as a software developer are physically located in Florida, regardless of where your clients reside, you’d be taking quite a bit of risk if you formed a Delaware LLC and didn’t qualify it as a foreign LLC in Florida. There are important rights and privileges that can be lost if state officials determine that a company should be registered but is not. For example, in addition to being liable for back taxes, interest and penalties, a company can forfeit the right to sue in state court to collect debts or enforce its rights in other significant ways. Unless you have a compelling reason to form your business entity in Delaware, assuming you are physically located in Florida, the simplest and safest approach is likely to form a Florida LLC.