Starting a business is exciting—but choosing the best state to form an LLC can make a big difference in how your company is taxed, protected, and perceived. While many entrepreneurs instinctively think of forming an LLC in their home state, others seek out tax-friendly, privacy-focused, or cost-effective states like Delaware, Wyoming, or Nevada.
In this guide, we’ll break down the cheapest states to form an LLC, compare Delaware vs Wyoming LLC, and help you understand which states offer the best legal and financial advantages for your business.
Picking the right state is important—but so is choosing a trusted formation service. Northwest Registered Agent makes it easy: expert setup, ironclad privacy protection, and a free year of registered agent service. Save time and stay compliant—no hidden fees, no hassle.
Why Your LLC’s Formation State Matters
Not all states are equal when it comes to LLC formation. Here’s why your choice matters:
- Tax Benefits: Some states have no income tax or low business taxes.
- Privacy Protection: Certain states let you form an LLC without publicly revealing your name.
- Legal Framework: A well-established legal environment can protect you in case of lawsuits or disputes.
- Ongoing Costs: Annual fees, franchise taxes, and reporting requirements vary widely.
Before diving into the article, check out our post on LLC vs Sole Proprietorship: Which is Right for You?
1. Delaware: The Corporate Favorite
Delaware is one of the most popular states to form an LLC—for good reason.
Why Choose Delaware?
- Business-Friendly Legal System: Delaware’s Court of Chancery is known for handling corporate cases efficiently.
- Strong Legal Precedents: Decades of business law make it easier to resolve disputes.
- Privacy: Member names do not need to be listed in public filings.
- Investor Confidence: Startups and VCs often prefer Delaware entities.
Delaware LLC Costs:
- Filing Fee: $90
- Annual Franchise Tax: $300
- Registered Agent Requirement: Yes
✅ Ideal For: Startups, companies seeking outside investment, or those planning to go public.
2. Wyoming: Privacy and Affordability
Wyoming is often called the best state for small business LLCs, especially for privacy and affordability.
Why Choose Wyoming?
- No State Income Tax
- High Privacy: Anonymous LLCs are allowed—you don’t have to disclose owners publicly.
- Low Fees: Filing and annual fees are among the lowest in the U.S.
- Asset Protection: Strong protection from creditors and lawsuits.
Wyoming LLC Costs:
- Filing Fee: $100
- Annual Report Fee: $60 minimum
- Registered Agent Requirement: Yes
✅ Ideal For: Entrepreneurs valuing privacy, asset protection, and minimal costs.
3. Nevada: The West Coast Alternative
Nevada is another popular LLC-friendly state, especially among digital businesses and asset protection seekers.
Why Choose Nevada?
- No State Income or Corporate Tax
- Strong Liability Protection
- Privacy-Friendly: No disclosure of LLC members or managers
- Quick Setup: Fast processing and business registration
Nevada LLC Costs:
- Filing Fee: $75
- Business License Fee: $200
- Annual List Fee: $150
- Registered Agent Requirement: Yes
✅ Ideal For: High-risk businesses, online entrepreneurs, or those focused on liability protection.
4. Texas: Big Opportunity, No Income Tax
Texas is increasingly popular due to its size, economy, and business climate.
Why Choose Texas?
- No Personal Income Tax
- Robust Economy: Second largest in the U.S.
- Startup Growth: Cities like Austin and Dallas are innovation hubs
- No Annual Franchise Tax (for entities earning < $1.23M)
Texas LLC Costs:
- Filing Fee: $300
- Annual Report: No cost for most small businesses
- Registered Agent Requirement: Yes
✅ Ideal For: Businesses operating in or targeting Texas, especially tech startups.
5. Florida: Business-Friendly and Tax-Light
Florida combines a low-tax environment with a booming economy.
Why Choose Florida?
- No State Income Tax
- Growing Market: Ideal for service-based businesses and e-commerce
- Relatively Low Annual Fees
Florida LLC Costs:
- Filing Fee: $125
- Annual Report Fee: $138.75
- Registered Agent Requirement: Yes
✅ Ideal For: Service businesses, real estate investors, and e-commerce companies.
Quick Comparison Table: Best States to Form an LLC
| State | Filing Fee | Annual Fees | State Income Tax | Privacy | Best For |
|---|---|---|---|---|---|
| Delaware | $90 | $300 franchise tax | No | ✅ | Startups, venture-backed businesses |
| Wyoming | $100 | $60+ | No | ✅✅ | Small businesses, privacy seekers |
| Nevada | $75 | $350+ | No | ✅ | Asset protection, online businesses |
| Texas | $300 | None under $1.23M | No | ❌ | Local businesses, tech startups |
| Florida | $125 | $138.75 | No | ❌ | Real estate, local service businesses |
6. Delaware vs Wyoming LLC: Which Is Better?
This is one of the most searched comparisons online: Delaware vs Wyoming LLC. Both are business-friendly, but they serve different needs.
Delaware LLC Pros:
- Established court system and legal framework
- Preferred by venture capitalists
- Recognized nationwide for corporate law
Wyoming LLC Pros:
- Greater privacy protections
- Lower formation and annual fees
- Better asset protection for small businesses
Final Verdict:
- Choose Delaware if you’re raising funds or want a recognized corporate structure.
- Choose Wyoming for low costs, privacy, and asset protection without VC funding.
7. Cheapest State to Form an LLC
When it comes to affordability, Wyoming and New Mexico are often cited as the cheapest states to form LLCs.
Why Wyoming Wins:
- Low filing and maintenance fees
- No franchise tax
- No personal income tax
- Strong privacy protections
Honorable Mentions:
- New Mexico: Filing fee is just $50 and offers anonymous LLCs.
- Kentucky & Arkansas: Also have low setup costs but fewer privacy advantages.
✅ Bottom Line: Wyoming is the overall cheapest and best value state for LLC formation.
8. Should You Form an LLC in a Different State Than You Live?
This is a common question for entrepreneurs looking to save money or protect privacy.
The Pros:
- Potential tax savings
- Privacy benefits
- Stronger legal protections in business-friendly states
The Cons:
- Foreign LLC registration may be required in your home state
- Extra fees and paperwork for operating in two states
- Still liable for taxes in your home state if operating there
Key Tip: If your business operates solely in your home state, it’s usually better to form your LLC there.
9. How to Form an LLC in These States
Here’s a step-by-step overview that generally applies across all 50 states:
- Choose a Name – Must be unique and meet state naming guidelines.
- Appoint a Registered Agent – This person or service receives legal documents.
- File Articles of Organization – Submit to the Secretary of State.
- Create an Operating Agreement – Especially important for multi-member LLCs.
- Obtain an EIN – From the IRS for tax and banking purposes.
- Pay State Fees – Vary by state (see table above).
- Submit Annual Reports – If required.
Most entrepreneurs use services like ZenBusiness, Northwest Registered Agent, or Incfile to simplify this process.
Conclusion: Which State Is Best to Start Your LLC?
The best state to start an LLC depends on your unique goals:
- Want VC funding and legal prestige? 👉 Delaware
- Want privacy and low costs? 👉 Wyoming
- Want no taxes and fast setup? 👉 Nevada
- Want to operate locally without extra fees? 👉 Your home state
- Want big market access and low taxes? 👉 Texas or Florida
No one-size-fits-all answer exists, but by weighing tax savings, privacy, legal benefits, and costs, you’ll be equipped to make the best choice.
FAQs About Best States to Form an LLC
1. What is the cheapest state to form an LLC?
Wyoming is often considered the cheapest due to its low filing fees, no income tax, and strong privacy laws.
2. Is Delaware or Wyoming better for an LLC?
Delaware is better for large corporations or startups, while Wyoming is ideal for small businesses seeking privacy and affordability.
3. Do I need to register in my home state too?
Yes—if you operate in your home state but register elsewhere, you must also register as a foreign LLC in your home state.
4. Can I form an anonymous LLC?
Yes, states like Wyoming and New Mexico allow you to create anonymous LLCs that don’t disclose owners publicly.
5. Which state offers the most privacy?
Wyoming is widely recognized for its superior privacy and asset protection laws.