Q: Where should I register my Visual Effects LLC, NY or DE?

A: I prefer Delaware because it offers specific advantages that are particularly attractive for businesses seeking investment or that want to minimize their tax burdens. As a New York attorney for 45 years, I find that New York has an excellent law and a legal system. Still, Delaware is more flexible in its corporate statutes, court system, and tax benefits, making it my choice for many companies, especially those that operate outside of Delaware. If you intend ever to take the company public, you would be best off having a Delaware corporate entity.

A: If Delaware, you'll need a Delaware attorney and any disputes will be venued in Delaware. These considerations often outweigh all others.

Jack

A: Delaware offers several advantages that may benefit your VFX business structure. Delaware has a superior LLC statute that is regularly updated to address inconsistencies and respond to court decisions, providing a more flexible and well-developed legal framework for businesses. Many businesses choose Delaware incorporation because of its business-friendly environment, favorable tax structure, and predictable body of law. This could be particularly valuable given your need for future investment.

However, forming in Delaware while operating primarily in New York involves additional considerations. If you register in Delaware, you'll still need to register your company as a foreign entity with your home state's Secretary of State office, which adds filing fees and administrative requirements. Rather than saving money by incorporating in Delaware, you ultimately end up paying fees in two states, and you're not absolved from paying New York taxes if your business operates there.

For your specific situation—a VFX company with outsourced work to India and operations primarily outside New York—Delaware may be advantageous. Delaware offers advantages including a well-established corporate law system, strong reputation for investor protection, flexible corporate structure, and no state corporate income tax for companies operating outside Delaware. For film projects where the filmmakers are bicoastal or have aspirations to be, Delaware is often considered a better option than registering in a single state like New York or California. Since most of your work will be outsourced to India and operations will primarily occur outside NY, these benefits could outweigh the additional administrative requirements.

I recommend weighing these factors against your specific business needs, particularly your plans for outside investment and international operations. The decision should align with your long-term business strategy, considering both initial costs and ongoing administrative requirements in both jurisdictions.