I live in PA. My sister lives in NJ. In which state should we register our business?

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There is no simple answer to your question based upon the information you have provided. It is not required that you be a resident of a state to organize a business there. It is also not required that the business
actually be conducting business in the state you have chosen. Where you organize should not be based upon either your or your sister’s residence. It should be based upon an analysis of the type of business you intend
to pursue, where the business will be operated, and the impact of the state’s tax laws on the type of business you have chosen. You must also analyze whether the business should be a corporation or a limited liability company (or some other form of entity) and how you want the entity to be taxed. You should consult an attorney familiar with these transactions help you to make the proper decisions.
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