The best state to form an LLC depends on where you operate — not filing fee alone. Wyoming, Delaware, New Mexico, Nevada, or your home state: a practical breakdown for US and non-US founders. Ready to file? See our LLC formation service.
Strong privacy protections, no state income tax, low $100 filing fee, $60 annual report. The default choice for anonymous or holding-company LLCs.
Best for: Non-US founders, holding LLCs, privacy-focused single-member LLCs
Business-friendly Court of Chancery, well-known to investors, $110 filing fee, $300 flat franchise tax. The expected choice for venture-backed and multi-state operations.
Best for: VC-backed startups, multi-state businesses, founders who want investor familiarity
$50 filing fee, no annual report, no annual fee. The cheapest US LLC to maintain, with reasonable privacy.
Best for: Anonymous LLCs, low-cost holding entities
No state income tax and strong asset protection — but high annual costs (~$350/yr in fees and licenses). Useful for owners physically operating in Nevada.
Best for: Nevada-resident founders, asset-protection setups
If you're a US resident actually operating from your home state, forming there is almost always cheapest and simplest. Forming elsewhere just means paying twice — once where you form, once to foreign-qualify back home.
Best for: US-resident founders running a local business
The best state to form an LLC is almost always the state where you already have business nexus — employees, inventory, an office, or regular in-person clients. Cross-state formation only makes sense when you genuinely have no nexus anywhere in the US (common for non-US founders) or when you are optimizing for a specific legal outcome like venture fundraising.
Work through these four questions in order:
The three states non-residents pick most often. Head-to-head:
| Wyoming | Delaware | New Mexico | |
|---|---|---|---|
| Filing fee | $100 | $110 | $50 |
| Annual report | $60 min | $300 franchise tax | None |
| State income tax | None | None on out-of-state income | None on out-of-state income |
| Owner privacy | Strong (members + managers private) | Members private on Cert of Formation | Strong (members + managers private) |
| Court system | Standard | Court of Chancery — gold-standard for business disputes | Standard |
| Best for | Privacy + low ongoing cost | Raising VC, complex ownership | Cheapest long-term, anonymous holding |
Quick pick: raising VC? Delaware. Solo founder optimizing for privacy and price? Wyoming. Holding company with no operations? New Mexico.
If you sell software, courses, or services globally with no US office, employees, or inventory, you have flexibility. Wyoming is the default: $100 to file, $60/year, no state income tax, strong privacy. New Mexico wins if you want the absolute lowest maintenance ($50 once, no annual report). Avoid California and New York unless you actually live there — their franchise taxes and publication rules erase any cross-state savings.
Inventory stored in an Amazon fulfillment center can create nexus in multiple states. Many sellers still form in Wyoming or their home state and deal with sales-tax nexus separately through a marketplace facilitator or a sales-tax service. If you live in Texas and run FBA from Texas, form in Texas — a Wyoming LLC does not exempt you from Texas obligations when you operate from there.
Form the LLC in the state where the property sits. A Wyoming parent LLC owning a Texas rental still needs a Texas LLC (or foreign qualification) for the Texas property because the asset creates nexus. Multi-property investors sometimes use a Wyoming holding LLC that owns state-specific child LLCs — that structure is for asset protection and estate planning, not for skipping local fees.
Plumbers, designers, therapists, and contractors should form in the state where they work. The liability protection and tax simplicity come from using an LLC at all — not from picking a low-fee state three time zones away. Your home state annual report is almost always cheaper than formation state + foreign qualification combined.
Wyoming for the best balance of privacy, case law, and cost. New Mexico if every dollar of maintenance matters. Delaware only if US investors are already on the cap table or term sheet. See our LLC for non-US residents guide for banking and tax specifics.
The Wyoming/Delaware/New Mexico content online is mostly written for the small minority of founders it actually applies to. If you live in Texas and run your business from Texas, forming a Wyoming LLC doesn't make your business a Wyoming business — Texas still considers you a Texas business that has to register as a foreign LLC in Texas. Now you pay both states' fees, hire registered agents in both states, and file two annual reports. The Wyoming privacy benefit is also gone because Texas has your name on the foreign-qualification filing.
"Doing business" in a state usually means any of: a physical office, employees living there, significant inventory stored there, or regular in-person services. If any of those apply to a state other than where you formed, that state requires you to foreign qualify the LLC there. The process is essentially a second formation:
California is the most aggressive enforcer — even a Wyoming LLC with one California-resident member operating from home is expected to register and pay the $800 minimum franchise tax. See our foreign qualification guide for the state-by-state thresholds.
Formation + 4 years of annual reports / franchise tax, before registered agent fees:
| State | Filing | Annual × 4 | 5-year total |
|---|---|---|---|
| New Mexico | $50 | $0 | $50 |
| Wyoming | $100 | $240 | $340 |
| Delaware | $110 | $1,200 | $1,310 |
| Nevada | $425 | $1,400 | $1,825 |
| California | $70 | $3,200 | $3,270 |
Add ~$50–$150/yr for registered agent if you don't live in the state. California's $800 minimum franchise tax applies even at $0 revenue.
California still treats you as a CA LLC subject to the $800 franchise tax. You pay both states.
If you're not raising US VC, Delaware costs $300/yr franchise tax with zero benefit. Pick based on your roadmap.
States can void contracts you signed, deny your right to sue in their courts, and stack penalties + back fees. Eventually they always catch up.
Out-of-state Nevada LLCs rarely keep the protection in court. Wyoming gets you similar protection at a fraction of the ongoing cost.
