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For A Few Dollars Less: Explaining State To State Variation In Limited Liability Company Popularity, Daniel M. Häusermann
For A Few Dollars Less: Explaining State To State Variation In Limited Liability Company Popularity, Daniel M. Häusermann
University of Miami Business Law Review
The limited liability company (LLC) is a much more popular business entity in some U.S. states than in others. This empirical study provides the first detailed analysis of this phenomenon.
I find that formation fees, rather than taxes or substantive rules or anything else, explain the variation in LLC popularity best. Differentials between the fees for organizing an LLC and the fees for organizing a corporation explain 17% to 28% of the state-to-state variation in LLC popularity. These formation fee differentials are not very big, but they are highly visible at the moment the business entity is formed. In contrast, …