Best State to Form an LLC: Fees, Taxes and When Your Home State Wins

Wyoming and Delaware top many lists of the best states to form an LLC, whatever the business does. Their low fees and "no tax" promises make your own state look like the wrong choice. For a business with local customers it usually isn't. A Wyoming LLC run from California still owes California at least $800 a year.

For most small businesses, the best state to form an LLC is the one where you live and actually run the business. That's where your office and your local customers usually are. Another state does make sense in a few cases:

• an online business with no US base
• a startup that plans to raise money from investors
• an owner who lives outside the US

Below are the fees and yearly costs in seven states, along with the questions to answer before you compare them.

The best state to form an LLC is usually where you operate

Before you look at any price, ask yourself where the work will happen. Say you form in another state but operate at home. Your home state will usually want the LLC registered there as a "foreign LLC". Then you pay fees and file reports in two states. Taxes are also generally owed where the business earns its money. So a state that looks cheap on paper rarely saves a local business anything.

That matches what we see in practice. In our work with clients, most of them form the company in their home state. Taxes and fees are part of the reason. The other part is banking. When the company comes from a different state, banks may refuse to open an account or ask for more documents.

Some clients do choose another state on purpose, usually for tax reasons. That can work when they understand what it changes. So before you compare fees, answer a few questions honestly:

1. Where do you live, and where will the business really operate?
2. Will investors expect a particular state?
3. Do you live outside the US?
4. How much do you care about your name in the public state record?
5. What's the total yearly cost if you'd have to register in a second state too?

If the first question has a clear answer and nobody is investing, you most likely already know your state.

Comparing LLC fees and yearly costs in seven states

Still, you'll want to see the numbers, so you open the state websites. The fees below come from official state pages read in October 2026, except where a secondary source is named. Registered agent fees are extra in every state, and the state doesn't set them. A registered agent is a person or company with an address in the state. The agent receives official mail for the LLC.

A few details sit behind the table. Delaware's $400 tax applies from tax year 2026. Texas LLCs under the threshold still file a report by May 15. Florida's $125 is the $100 filing fee plus $25 for the registered agent designation.

The second bill: registering as a foreign LLC at home

The table only shows the state where you form. Once the business operates somewhere else, the costs change. An LLC is "domestic" in the state where it was formed and "foreign" everywhere else. When it does business in another state, that state usually wants it registered. This is called foreign qualification.

In practice it means:

• a second filing fee
• a second registered agent
• a second set of yearly reports and deadlines

Wyoming, for example, charges $150 for a Certificate of Authority. That's the document a foreign LLC needs to do business there. Every other state has its own fee for the same registration.

Taxes work the same way. Many guides promote Wyoming or Nevada as "no tax" states. But taxes are generally owed where the money is made. If you live in California and serve California customers, the business is tied to California. The state on the formation papers doesn't change that. Tax professionals call this "nexus".

The California Franchise Tax Board says the $800 annual tax applies to every LLC that does business in California or is organized or registered there. It applies even with no business activity, until the LLC is cancelled.

We worked out an example ourselves from the official fees above. Say you live and work in California and form the LLC in Wyoming to save money. Wyoming charges $100 to form and at least $60 a year in license tax. You also need a Wyoming registered agent.

Because the business operates in California, it also registers there as a foreign LLC. So it pays California's registration fee and owes the $800 annual tax. Each year you pay at least $60 + $800 = $860 in state charges. That's before California's registration fee and two registered agents.

An LLC formed in California pays the $800 and needs one agent. The California side is covered in more detail in Starting an LLC in California: Costs, State Office, Taxes and Timeline.

A closer look at each state

Each state on the list fits a different kind of owner, so it helps to look at them one by one.

Wyoming

Wyoming charges $100 to file Articles of Organization under the fee schedule effective July 1, 2026. Each year the LLC files an annual report and pays a license tax. The tax is $60 or two-tenths of one mill on each dollar of assets located and used in Wyoming, whichever is greater. For most small LLCs that comes to $60.

Low and predictable fees are the main reason owners pick Wyoming. It fits online businesses and owners without a US home state. It fits poorly for a local business run from another state.

If a Wyoming LLC lapses, reinstatement isn't free. It costs $100 after dissolution for unpaid tax and $350 after dissolution for having no registered agent.

Delaware

Delaware's formation form lists a $110 filing fee for a Certificate of Formation. A certified copy is $50 more. Every Delaware LLC pays an annual tax by June 1 of each year after the year it was formed.

House Bill 400 was signed on May 21, 2026. It raised that tax from $300 to $400, starting with the 2026 tax year. So the first payments at the new rate are due in 2027. Many guides and AI answers still quote $300.

Formation guides usually recommend Delaware to companies that plan to raise investor money. They point to its business court, the Court of Chancery. For a local service business or a small online store this rarely matters. And the LLC still has to register in the home state if it operates there.

New Mexico

According to the Wolters Kluwer state guide, New Mexico doesn't require LLCs to file an annual report. The Articles of Organization also don't have to list members or managers. That's why New Mexico comes up for owners who want low upkeep and fewer names in the public record.

We couldn't find the official fee page during our research. So check the current filing fee with the New Mexico Secretary of State.

Nevada

Nevada charges for several items at once:

• the Articles of Organization
• an initial list of managers or members
• a state business license

A ZenBusiness fee guide updated in September 2026 puts the first-year state total at about $436. It puts the yearly cost at about $350. We couldn't confirm these figures on the Nevada Secretary of State site, so treat them as estimates. Unless you live in Nevada or have a specific reason to be there, it's one of the pricier options here.

Texas

Texas charges $300 to file a Certificate of Formation (Form 205). The yearly obligation is the franchise tax report, handled by the Texas Comptroller.

For reports due in 2026 and 2027, no tax is due if total revenue is at or below $2.65 million. The threshold was $2,470,000 for 2024 and 2025. An LLC under the threshold still files a Public Information Report or an Ownership Report by May 15. More on this in Starting an LLC in Texas: Costs, State Office, Taxes and Timeline.

Florida

A new Florida LLC pays $100 to file and $25 for the required registered agent designation. So the required state fees total $125. The Sunbiz fee page shows $160 because it adds a certified copy ($30) and a certificate of status ($5). Both are optional.

The annual report costs $138.75. If the state receives it after May 1, it costs $538.75. So a late report is $400 more expensive.

Processing times in Florida vary more than people expect. In our work, Florida filings have taken anywhere from about five business days to a month. Filings we sent in December 2025 came back in January 2026. New York online filings, by comparison, often come back the same day.

California

California is the state people most often try to avoid, mainly because of the $800 annual tax. The first-year exemption applied only to tax years beginning from January 1, 2021 through December 31, 2023. So an LLC formed in 2026 owes $800 from its first year. The first payment is due by the 15th day of the 4th month after filing with the Secretary of State.

An LLC with California income of $250,000 or more also pays an LLC fee with Form 568:

As the Wyoming example showed, forming in another state rarely removes these costs for a business that operates in California.

When privacy starts to matter

At some point you'll notice that your name will sit in a public state record. Some owners look past their home state for that reason alone. No state makes an owner fully anonymous. States differ in how much of the owner's information shows up in the public record. According to Wolters Kluwer, New Mexico doesn't require members or managers to be named in the Articles of Organization.

Formation guides often name three states for privacy:

1. Wyoming
2. Delaware
3. Nevada

But we didn't confirm the exact rules on official pages. So check what each state's formation form asks for.

Privacy in the state record also has limits. Banks ask who owns the company. And a foreign-owned single-member LLC reports its owner to the IRS on Form 5472.

The "no tax" promise and what states really charge

The other promise you'll keep running into is "no tax". In reality, every state charges something to keep an LLC in good standing. It helps to separate the state's yearly charges for the LLC itself from income tax on the profit.

Among the states compared here, the yearly charges look like this:

• New Mexico has no annual report (per Wolters Kluwer).
• Wyoming has a $60 minimum license tax.
• Texas charges no franchise tax at or below $2,650,000 in revenue but still requires the report.
• Florida charges a fixed $138.75 for the annual report.
• Delaware charges a fixed $400 annual tax.
• California charges at least $800, plus the LLC fee from $250,000 of California income.

So New Mexico and Wyoming have the lowest yearly charges, and California is the most expensive of the group.

Income tax on profit is a separate question. It usually depends on where you live and where the business operates. The state on the formation papers usually doesn't decide it. A tax professional in your home state can tell you what applies.

The best state to form an LLC if you live abroad

Everything so far assumes you have a home state. If you live abroad, the picture changes. Say you have no office, no employees and no warehouse in the US. Then there's no home state in the usual sense, so the choice is truly open.

Owners in this position often compare three states on yearly cost and paperwork:

• Wyoming
• New Mexico
• Delaware

Delaware is now the most expensive of the three to keep, at $400 a year.

Whatever you pick, the state doesn't change federal obligations. A US single-member LLC owned by a foreign person is a "disregarded entity" for federal tax. It must file Form 5472 with a pro forma (shortened) Form 1120.

The penalty is $25,000 for not filing on time or for filing a substantially incomplete form. You can extend the deadline with Form 7004 if you file it by the regular due date. Details are in Form 5472 for Foreign-Owned US LLCs: Who Must File, Due Date and Penalties.

You may also see warnings about a BOI report. It no longer applies to these companies. FinCEN's final rule came out on August 11, 2026 and took effect on August 14, 2026. It made the exemption for US-formed companies permanent.

Only companies formed under foreign law and registered in a US state still report. An LLC formed in Wyoming or Delaware is a US company even if its owner lives abroad.

For owners abroad, the registered agent often matters more than the state. The agent receives the state's mail, so official letters don't get lost. An owner who lives in the state can act as their own agent, but someone abroad needs one. More on the wider picture in Can a Non-US Resident Own a US LLC? What It Involves.

The mistakes you can still avoid

You haven't filed yet, which is the best moment to catch the usual mistakes. These are the common ones, starting with the most frequent:

1. choosing by a slogan such as "no income tax" or "most private"
2. ignoring foreign qualification
3. planning only for the formation fee and forgetting the yearly bill
4. planning with old numbers

A slogan says nothing about the state where you actually work. And if the business runs from your home state, that state usually wants it registered too.

The yearly bill goes by a different name depending on the state. You'll see it called an annual report, an annual tax or a franchise report. It comes every year, and missing it is expensive. A late Florida annual report costs $538.75 instead of $138.75. Wyoming charges $100 or $350 to reinstate a dissolved LLC, depending on the reason.

The state-by-state rules are collected in LLC Annual Report: Requirements, Fees and Due Dates by State. As for old numbers, Delaware's annual tax is now $400 rather than $300. And California's first-year exemption has ended.

For most small owners, the biggest drawback of an LLC is this ongoing paperwork. Each state has its own yearly rules, and an LLC registered in two states has two sets of them. Missed filings lead to late fees or loss of good standing.

Deciding alone or with help

If you live and work in one state, the decision takes a few minutes: form there. It gets harder in these cases:

• you live outside the US
• you plan to operate in several states
• you expect investors

Then the real question is the total cost over several years. You also need to know which filings each state will expect.

Doing it yourself costs only the state fees. But you carry the research:

• current fees (Delaware changed both its fees and its annual tax in 2026)
• yearly deadlines in each state
• foreign registration rules
• federal forms such as Form 5472

A formation service or adviser checks the same points for you. When our team forms an LLC for a new owner, we look at the state choice first, since it sets the bills for years. Either way, the extra fees of a poorly chosen state come back every year.

What to do before you file

Start with where you live and where the business will actually operate. If that's one state and nobody is investing, form there. If you're looking at another state, add up the yearly costs in both states over several years. Check current fees on each state's own site, since Delaware changed its numbers in 2026. If you live abroad, look at the registered agent and Form 5472 before the state itself.