The Best State to Form an LLC Is Almost Always Your Own

The foreign LLC problem

An LLC is “domestic” in the state where it was formed and “foreign” everywhere else. If a foreign LLC does business in a state, that state will usually want it to register. That means a filing fee, a registered agent there, and that state’s annual report, on top of everything it already owes at home.

“Doing business” usually means things like an office, employees, a storefront, inventory or regular in-person customers in the state. Each state draws the line a little differently. If you’re a consultant who lives and works in Ohio, you’re doing business in Ohio.

So the Ohio consultant who forms in Wyoming ends up with:

• A Wyoming LLC: $100 to file, at least $60 a year for the annual report, and a Wyoming registered agent (Northwest charges $125 a year), because she isn’t there.
• An Ohio foreign registration: $99 to file. Ohio has no annual report for LLCs, which is lucky. Most states have one.
• Ohio taxes on her business, exactly as before.

She’s paid more, filed more, and gained nothing but a Wyoming address on her paperwork.

The math

Here’s a home-state LLC next to the same business run through a Wyoming LLC with a foreign registration at home. We used Illinois as the home state. The fees come from our state records, and the registered agent is $125 a year, Northwest’s price. Annual reports start in year two in both states, so five years means one formation and four reports.

	Illinois LLC	Wyoming LLC + Illinois foreign registration
Formation	$150	$100 (WY) + $150 (IL foreign) = $250
Registered agent, years 1 to 5	$0 (you)	$125 x 5 = $625
Annual reports, years 2 to 5	$75 x 4 = $300	($60 + $75) x 4 = $540
Five-year total	$450	$1,415

The taxes are the same in both columns. The right-hand column costs more than three times as much for the same company.

Wyoming, Delaware, Nevada

Each one is famous for a real reason, and each has a real audience. It’s just not the average small business.

Delaware has the Court of Chancery, a deep body of business case law, and statutes that investors and their lawyers know well. If you’re raising venture capital, your investors may well ask for a Delaware corporation rather than an LLC. For an LLC with no investors, Delaware means a $110 filing fee and a $400 annual tax due every June 1 (it was $300 through tax year 2025), with no advantage you’ll actually use.

Wyoming has the lowest ongoing cost of the three and no state income tax, and its Articles of Organization don’t ask for the members’ names. It suits holding companies and people who live in Wyoming. For an operating business somewhere else, see the table above.

Nevada gets marketed alongside Wyoming, but it isn’t cheap to keep an LLC there. On top of the $75 filing fee, you file a $150 annual list every year (plus an initial one at formation) and pay $200 a year for a state business license. That’s $350 a year before you’ve done anything.

When another state makes sense

• You’re raising institutional money. Probably Delaware, and probably a corporation rather than an LLC. Ask your lawyer and your investors.
• The company has no operations anywhere. A holding LLC that owns intellectual property or passive investments, with no office or employees, may not need to register anywhere else. Get tax advice first, because “passive” is narrower than people think.
• You’re moving. If you’ll be in another state within the year, form where you’re going.
• Real estate. Many investors form the LLC in the state where the property is, because that’s where it does business anyway.

For everyone else, the answer is the state you live and work in. Find its filing fee and steps in the LLC formation guide, or every state’s fees in LLC cost by state.