Delaware, Nevada, Wyoming, and New Mexico each get pitched as "the best state" online — but for most people, the right answer is simply the state you already live in. Here's when that's true, and the specific, real cases where it isn't.
Search "best state to form an LLC" and you'll find a wall of articles pitching Delaware, Nevada, Wyoming, or New Mexico as the obvious answer — often written by services that profit regardless of which state you pick. Here's what most of those articles leave out: if you form your LLC somewhere you don't actually live or operate, you'll typically still need to register as a "foreign LLC" back home anyway. That means two states' filing fees, two registered agents, and two sets of ongoing paperwork — for a benefit that, for a typical small business, usually doesn't apply.
The real advantages of these four popular states exist — they're just narrower than the marketing suggests, and they apply to specific situations rather than "anyone starting a business." The sections below walk through exactly who each one is actually built for.
Delaware's established case law and investor familiarity is why VC-backed startups default here. Genuinely strong reason — but LLCs pay a flat $300/year franchise tax regardless of revenue, and this mostly applies to equity-funded startups, not most small businesses.
Wyoming was the first state to codify strong charging-order protection for single-member LLCs, has no franchise tax, and costs $100 to form plus a $60/year report — popular for holding companies and multi-property real estate portfolios.
Nevada offers strong charging-order protection and no personal income tax, but forming costs $425 upfront and $350/year ongoing — plus a Commerce Tax above $4M revenue. Often chosen by high-risk operating businesses willing to pay for the extra legal certainty.
New Mexico is the only major state with no annual report or fee at all, and keeps member names off public filings. At $50 to form and $0/year after, it's the cheapest genuinely anonymous option — popular with e-commerce and location-independent founders.
If you have one location, one state of operation, and no outside investors, filing at home avoids the double-filing, double-fee, double-registered-agent trap entirely.
Say you live in California but form your LLC in Wyoming to save on fees. If you're actually operating from California — taking orders, seeing clients, running day-to-day work there — California will generally require you to register as a "foreign LLC" doing business in the state. That means paying Wyoming's fee and California's foreign registration fee, maintaining a registered agent in both states, and filing paperwork in both.
For most small businesses, this doubles ongoing cost and paperwork for a legal or tax advantage that usually doesn't apply to them — the benefits typically publicized for these states concern the state's own corporate structure, not a way to avoid tax on income you actually earned at home.
| State | Formation Cost | Annual Cost | Best Known For | Real Fit |
|---|---|---|---|---|
| Delaware | ~$110 | $300 flat tax | Investor/VC familiarity | Startups raising equity funding |
| Nevada | $425 | $350 | Charging-order protection | High-risk operating businesses |
| Wyoming | $100 | $60 min. | Low cost, asset protection | Holding companies, real estate |
| New Mexico | $50 | $0 | Anonymity, no annual report | Privacy-focused, e-commerce, non-residents |
| Your Home State | $35–$500 | Varies | Avoiding double-registration | Most small businesses and solo founders |
See the full filing-fee and annual-cost breakdown for every state on our LLC Costs by State page.
Everything above assumes you live and operate somewhere in the US. If you're a non-US resident forming a US LLC — common for e-commerce sellers, freelancers, and remote service businesses — the "form at home" logic doesn't apply, since you don't have a US home state to default to. In that case, Wyoming, Delaware, and New Mexico are the three most commonly chosen states, largely for their privacy protections and straightforward, low-touch compliance.
One compliance detail that catches non-resident owners off guard: any US LLC owned by a non-US person must file IRS Form 5472 annually, even with zero revenue — penalties for missing it start at $25,000 per form. This is a federal requirement regardless of which state you choose, so it's worth planning for from day one rather than discovering it later.
On privacy specifically: federal beneficial ownership (BOI) reporting requirements were narrowed in 2025 to exempt domestically-formed LLCs entirely, leaving only foreign-formed entities registering to do business in the US still subject to it — which means state-level anonymity (like New Mexico's or Wyoming's no-disclosure filings) now carries more practical weight than it did previously.
Do you have a physical location, employees, or clients in one specific US state? File there. This is the overwhelming majority of small businesses, and it's the simplest, cheapest, least error-prone path.
Are you raising outside investment, or planning to? Delaware is worth a real conversation with a lawyer — investor expectations here can outweigh the extra cost.
Do you want the lowest possible long-term cost with genuine privacy, and don't need Wyoming's deeper legal track record? New Mexico's $0 annual cost is difficult to beat.
Are you a non-US resident, or forming a real estate/holding structure spanning multiple states? This is a case where a short consultation with an attorney or CPA is genuinely worth the cost before filing.
"Almost formed in Wyoming because a blog told me to. Realized I'd have had to register as a foreign LLC in my own state anyway and just filed at home instead."
"Chose New Mexico specifically because I sell internationally and don't want to file an annual report every single year from a different time zone."
"Used Wyoming for a real estate holding LLC specifically, but my actual operating business is still filed in my home state."
Whether you're filing at home, in Delaware, Wyoming, or New Mexico, Northwest handles the filing and includes a registered agent for that state, free for the first year — no separate agent purchase needed regardless of which state you land on.