Key takeaways
- For many small businesses, the practical choice is the state where you live or operate.
- A low filing fee is only part of the cost. Yearly reports, taxes and agents add up.
- Forming in one state and operating in another can mean registering in both.
- Fees and rules change, so check the current state guide before you decide.
The short answer
The best state is usually the one where your business actually operates. Forming in a different state does not remove your obligations where you do business. A company formed elsewhere may still need to register there, keep a registered agent there and pay that state's taxes and recurring fees.
Why the home state is often the practical choice
- One set of rules. You deal with one state's filings, deadlines and taxes.
- No second registration. Forming elsewhere can add a foreign registration, a registered agent and recurring filings in the state where you work.
- Simple records. Your formation state and your operating state are the same.
If you plan to operate in several states, see Foreign Qualification.
What differs from state to state
These figures come from our state guides. They are a starting point, not a ranking.
| State | LLC filing fee | Yearly requirement | Worth knowing |
|---|---|---|---|
| Delaware | $110 | $400 annual LLC tax, due June 1 | Registered agent required |
| Florida | $125 | Annual report, due May 1 | Registered agent required |
| California | $70 | $800 annual LLC tax | Statement of Information within 90 days |
| New York | $200 | $9 Biennial Statement every 2 years | Most LLCs must publish a notice in two newspapers |
| Wyoming | $100 | Annual report, $60 minimum | No state corporate or personal income tax |
Read the full guide for each: Delaware, Florida, California, New York, Wyoming.
Questions to ask before you choose
- Where do you and your team live and work?
- Where are your customers, and will you sell or hire in other states?
- Do you plan to raise money from investors who may prefer a certain structure?
- What will the state charge each year, and what must you file?
- Are any owners outside the United States?
Delaware is often considered for corporations that plan to raise outside investment, because of its dedicated Court of Chancery and settled corporate case law. Wyoming has no state corporate or personal income tax, though federal tax, sales tax and other taxes can still apply.
If you are outside the United States
Many international founders can own a U.S. company. The same state choice applies, along with EIN, banking and tax questions. Forming a company does not guarantee a U.S. bank account, immigration status or a tax-free business.
Start with the International Founders guide.
