Search for the best state to form an LLC and you will find fifty confident answers, most of them written to sell you something. The reality is less exciting: only a handful of states are worth considering, and the right one depends almost entirely on where you live and what you are building.
If you are a US resident, the answer is usually your home state, and picking anywhere else can quietly double your costs. If you live outside the US, you have a genuine choice, and four states dominate for good reasons: Wyoming, Delaware, Texas, and Florida.
This guide covers both situations, compares what each state really costs per year, and explains the one case where the famous default, Delaware, is usually the wrong call.
US residents: the home-state rule
Here is the trap that catches thousands of founders every year. You read that Wyoming is cheap and private, so you form your LLC there. But you live in California and run the business from your kitchen table, which means the business legally operates in California.
California will require you to register that Wyoming LLC as a foreign LLC before it can lawfully do business there. This is called foreign qualification, and it means two filing fees, two annual reports, two registered agents, and you still owe California tax, including its annual franchise tax. You bought the costs of both states and the benefits of neither.
An LLC does business where its owners actually live and work, not where the paperwork sits. So if you are a US resident operating from home, form in your home state. The exceptions are narrow: rental property held in another state, or a passive holding company with no operations. In most cases, home state wins and the exotic options lose.
Non-residents get a real choice
If you live outside the United States, there is no home state to default to. You are not physically operating in any state, so you can choose on pure merits: formation cost, annual upkeep, privacy, and what banks and investors expect to see.
In practice, four states cover nearly every non-resident use case.
Wyoming: the default for online businesses
Wyoming charges $100 to file, its annual report starts at $60, and it has no state income tax. It also has some of the strongest privacy protections in the country: member names do not appear on the public formation record.
For Amazon sellers, freelancers, and agencies selling online, Wyoming is the sensible default. It is cheap to start, cheap to keep, and boring in the best way.
Delaware: the investor standard
Delaware charges $110 to form an LLC and a flat $400 franchise tax every year after that. What you get for the premium is reputation: the Court of Chancery, a deep body of business case law, and instant recognition from lawyers and investors worldwide.
That premium matters if you plan to raise venture capital. It matters much less if you are running a profitable one-person business, as we cover below.
Texas: for real operations
Texas has no state income tax, and its franchise tax is one most small LLCs never actually pay: revenue below the no-tax-due threshold owes nothing, though the state still expects an annual filing. Texas makes sense when you have real ties there, such as a 3PL warehouse, employees, or major suppliers.
Florida: simple and familiar
Florida also has no state income tax and a straightforward annual report, though its fee runs higher than Wyoming’s. It is popular with founders across Latin America for practical reasons: overlapping time zones, direct flights, and banks that already know Florida entities well.
When Delaware is the wrong choice
Delaware’s brand is so strong that many founders pick it by reflex. For a small business, that reflex typically costs $300 a year for nothing.
The Chancery Court is a genuine asset in complex disputes between shareholders. A single-member LLC selling on Amazon has no shareholders to dispute with. And the investors who insist on Delaware almost always want a Delaware C-Corp, not an LLC, a distinction we break down in LLC vs C-Corp.
The practical rule: choose Delaware when outside investors are a near-term plan, not a someday dream. If you raise a round later, converting or forming a new entity at that point is a routine, well-trodden step. Until then, Wyoming does the same legal job for a fraction of the yearly cost. We compare the two head to head in Wyoming vs Delaware for non-residents.
Annual costs at a glance
Formation fees are a one-time event. The number that actually matters is what the state charges you every year to stay in good standing.
| State | Filing fee | Typical annual cost | State income tax | Stands out for |
|---|---|---|---|---|
| Wyoming | $100 | Annual report from $60 | None | Lowest upkeep, strong privacy |
| Delaware | $110 | $400 franchise tax | Typically none on income earned outside Delaware | Investor recognition, Chancery Court |
| Texas | Varies | Franchise tax filing, most small LLCs owe $0 | None | Businesses with Texas operations |
| Florida | Varies | Annual report, fee higher than Wyoming’s | None | Americas time zones, banking familiarity |
Texas and Florida fees change from time to time, so check the current numbers in our state guides, which cover all 50 states. And remember that state fees are only part of the picture: registered agent service, federal filings, and tax prep apply no matter where you form.
How to decide in five minutes
Most founders can settle the question with four checks:
- You live in the US: form in your home state. Skip the Wyoming forums and avoid the foreign qualification trap.
- You live abroad and sell online: Wyoming is the default. Cheap, private, no state income tax.
- You are raising venture capital soon: Delaware, and probably a C-Corp rather than an LLC.
- You have physical operations in one state: a warehouse, staff, or an office means you form where the operations are, whether that is Texas, Florida, or anywhere else.
To compare total first-year and ongoing costs for your shortlist, run the numbers in our LLC cost calculator. When you are ready, Brio forms your LLC in any state for $1 plus the state fee, typically in 3 to 7 business days. Details are on the LLC formation page.
Frequently asked questions
What is the best state to form an LLC as a non-US resident?
For most non-resident founders selling online, Wyoming: $100 to file, an annual report from $60, no state income tax, and strong privacy. Delaware makes sense when venture capital is a concrete plan, while Texas or Florida make sense when your operations physically live there.
If your situation is not textbook, a free consultation is the fastest way to pressure-test the choice before you file.
Can I form an LLC in Wyoming if I live in another state?
You can, but if you run the business from your home state you will typically have to register the Wyoming LLC there as a foreign LLC anyway. That means paying both states every year while getting the legal benefits of neither. For US residents, forming at home is almost always cheaper and simpler.
Does forming in Delaware reduce my taxes?
Typically no. An LLC is a pass-through entity, so income tax follows the owner and where the income is earned, not where the LLC was filed. What Delaware adds with certainty is a flat $400 franchise tax every year, which is why it only earns its keep when investor expectations are part of your plan.
Can I move my LLC to another state later?
In most cases, yes. Many states allow domestication, which transfers the LLC to a new state while keeping its history, and the fallback is forming a new LLC and dissolving the old one. It is workable but involves paperwork, fees, and updates to your EIN records, bank, and contracts, so it is cheaper to choose well the first time.
Do I need to live in the state where I form my LLC?
No. No state requires LLC members to live there, which is exactly why non-residents can choose freely. Every state does require a registered agent with a physical address in the state, a service Brio provides in all 50 states as part of forming your company.
