Best State In The US To Form a New Engineering Firm 2

[Maui]

I've read posts from individuals in this forum who have established and grown their own engineering firms and consulting business over the years. Each state in the United States has its own specific rules and regulations regarding the establishment and operation of such businesses, and the tax laws and insurance requirements vary dramatically. I'd like to know what states are the most business friendly in these respects. If you were going to hang out a shingle to start your own engineering consulting business today, in what state would you establish the company given the option and why? I will assume that the company would be a sole proprietorship, an LLC or a PLLC. Incorporating is an option also, but I suspect that it is a less likely one for an individual. Replies from people who have either started these types of companies or who work in high level positions in them would be especially appreciated. I'd also like to hear from individuals who would warn against forming such a company in certain states.

Maui

 

[zdas04]

For a partnership or a sole proprietorship, income is treated in any state that has an income tax as though it was from a W-2. States that don't have an income tax tend to make up the budget funds through other taxes (property tax seems to be popular) and at the end of the day there isn't much difference from state to state.

For the various kinds of boutique corporations (e.g., LLC, PLLC, or Sub Chapter S), the rules that allow them are new enough that there isn't much historical state baggage and the places I've looked are all pretty much the same.

For full-blown corporations, the benefits of Nevada or Delaware are pretty clear when the corporation makes their first $5 million profit month. Before that the differences are pretty tough to quantify. To take advantage of the differences you need to be paying high-flying tax attorneys and big-time accounting firms a LOT of money. If your one-man Engineering firm ever reaches that point everyone will be mightily impressed.

Bottom line, live in a place appropriate to your practice and family considerations, then organize in a way that suits your risk tolerance. If you are mostly doing international work, live close to a major airport (I am starting to hate trying to take luggage for an extended international trip to a small regional airport). If you are doing on-line collaboration find somewhere that has decent telecommunications.

David Simpson, PE
MuleShoe Engineering

http://www.muleshoe-eng.com

Please see FAQ731-376 for tips on how to make the best use of Eng-Tips Fora.

Remember, being ignorant isn't your fault; staying ignorant is.

 

[msquared48]

A Bull Market.

Mike McCann
MMC Engineering

 

[TheTick]

I think in my home state their will be lots of opportunity in converting wastelands into greyfields.