How to Choose the Right State for Your LLC

You can form an LLC in any of the 50 US states, regardless of where you live or do business. But the right choice depends on your situation. Here's how to decide.

The Home State Rule

Here's the simple rule most people should follow: form your LLC in the state where you do business.

Why? Because if you form in Wyoming but operate in California, you'll need to:

• Maintain compliance in Wyoming
• Register as a "foreign LLC" in California
• Maintain compliance in California
• Pay fees to both states

You end up paying more and managing more paperwork. For most small businesses operating in a single state, forming locally is the simplest and cheapest option.

Popular Formation States

Three states are popular for LLC formation due to their business-friendly laws: Wyoming, Delaware, and Nevada. Here's what makes each unique.

Wyoming

Wyoming is our top recommendation for most LLCs, especially for international founders and online businesses.

Advantages:

• No state income tax
• No franchise tax
• Strong privacy protection (no public disclosure of members)
• Low formation and annual costs
• Asset protection laws
• First state to create the LLC structure (1977)

Best for: International founders, online businesses, solo entrepreneurs, privacy-conscious owners.

Delaware

Delaware is the gold standard for corporations and is also popular for LLCs, particularly for companies seeking investment.

Advantages:

• Court of Chancery (specialized business court)
• Well-developed business law and case precedent
• Preferred by venture capitalists
• No state income tax on out-of-state revenue
• Privacy for members (no public disclosure)

Disadvantages:

• Annual franchise tax for LLCs
• Higher costs than Wyoming

Best for: Companies planning to raise VC funding, complex multi-member structures, businesses needing sophisticated legal framework.

Nevada

Nevada markets itself aggressively for business formation, but it's lost some advantages it once had.

Advantages:

• No state income tax
• No franchise tax
• Privacy for members

Disadvantages:

• Higher formation and annual fees than Wyoming
• More complex annual filing requirements

Best for: Businesses actually operating in Nevada.

Cost Comparison

Formation and annual costs vary significantly by state. Here's a general comparison:

For specific pricing details, visit our pricing page.

For International Founders

If you're forming a US LLC from outside the United States, your considerations are different:

• You won't have a "home state" so you're free to choose any state
• Wyoming is usually the best choice due to low costs and privacy
• Delaware works if you plan to raise US venture capital
• Avoid states with high minimum taxes like California

For a detailed guide, see our best states for international founders article.

Frequently Asked Questions