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Forming a limited liability company is one of the most popular ways to start a business because it combines legal protection with flexible tax options. But where you form your LLC can have a big impact on your startup costs, taxes and privacy protections. While it’s usually best to form an LLC in your home state, some states stand out for offering stronger legal protections, lower fees and more favorable tax laws.
If you decide that forming an LLC is the right step for your business, there are professional services that can provide assistance. The best LLC services charge between $0 and $300 and can simplify the setup by filing your paperwork, providing a registered agent address and ensuring your business stays compliant with state laws. Read on for information about the top states in which to form an LLC.
The listings that appear are from companies from which this website may receive compensation, which may impact how, where and in what order products appear. Not all companies, products or offers were reviewed in connection with this listing.
Selecting the Best State for Your LLC
According to our research, the best state to register your LLC in is the state where you currently live. When you form an LLC in your home state, your LLC is known as a “domestic LLC.” If you register the LLC in another state, it’s known as a “foreign LLC.” Domestic LLCs usually have cheaper filing fees than foreign LLCs.
If you form an LLC in your home state, you’ll only need to register the LLC and pay a filing fee and annual reporting fee in that state. If you form an LLC in another state, you’ll need to pay an LLC service to maintain an address or office for you in the foreign state, plus pay filing fees and annual fees in two states (your home state and the state where you formed the LLC). Additionally, you’ll still be required to pay taxes in the state where you’re earning income.
If you don’t live in the U.S. and won’t have a physical presence in any U.S. state (such as with an online business), or if you’re thinking of moving to a new state, then it makes sense to form an LLC in a state that has the best environment for your particular business. You’ll want to look for a state that offers:
- Low or no state taxes (income or franchise taxes)
- Low LLC filing fees and annual costs
- Privacy protections for owners (where your business address is not publicly listed)
- Ease of filing and ongoing compliance (the state allows you to easily and efficiently form and maintain a business)
- Beneficial business climate and legal environment
If you’re choosing a state based purely on affordable fees, the cheapest states to form an LLC are:
What is the Best State for Forming an LLC?
Delaware, Wyoming, New Mexico, Texas and Florida are the top five states for forming an LLC, according to our research.
1. Delaware
If you’re looking to move somewhere new, and you’re thinking you may want to structure your LLC as a corporation now or in the future, Delaware can be a good choice. Delaware was the first state to allow the formation of series LLCs, which are umbrella LLCs with separate LLC divisions within. Delaware LLCs are also generally taxed only at the member level, such as a partner in a partnership. The state does have a state income tax that is graduated and ranges from 2.2% to 6.6%. The LLC itself does not pay taxes (other than the franchise tax) or file a return with the state of Delaware.
Delaware doesn’t require LLCs to file an annual report and there is no associated fee, although it does charge a $300 annual franchise tax on every LLC. A franchise tax is a state-level tax that is charged to all active businesses in the state, regardless of whether they are franchises. Additionally, Delaware is known for its business-friendly legal environment, due to its robust and efficient corporate law system, jury-free corporate trials and large number of corporate lawyers.
Delaware also has strict privacy laws in place. Other states make contact information and member information of every registered business a part of the public record, whereas Delaware allows this information to be anonymous.
The table below shows Delaware’s LLC fee costs.
| Domestic LLC Formation Fee | Foreign (Out-of-State) LLC Formation Fee | Annual Report Fee | Any Extra State-Specific Fees? |
|---|---|---|---|
| $110 | $200 | $0 (no annual report required) | $300 annual franchise tax |
2. Wyoming
If you’re looking to expand or relocate your business, a Wyoming LLC can be a great choice. Not only was it the first state to make LLCs a legal business structure in 1977, but Wyoming doesn’t have a state income tax, corporate income tax or franchise tax. It also has a cheap sales tax rate (currently 4%) and a relatively inexpensive LLC filing fee of $100. Plus, it also offers series LLCs.
Wyoming also has a business-friendly court system that has historically ruled in favor of asset protection. Both single-member LLCs and partnerships are protected by charging order, meaning creditors are limited to going after the debtor member’s distributions, and not any LLC assets or management.
Like Delaware, Wyoming also has strict privacy laws. The state requires that only the registered agent’s information be publicly listed, but members and managers are not required to have their names or addresses revealed in public records.
The table below shows Wyoming’s LLC fee costs.
| Domestic LLC Formation Fee | Foreign (Out-of-State) LLC Formation Fee | Annual Report Fee | Any Extra State-Specific Fees? |
|---|---|---|---|
| $100 | $100 | $60 | No |
3. New Mexico
New Mexico is another state with several key advantages for LLC formation. First, it has low fees — it charges just $50 to form a domestic LLC and has no annual report fee or requirement. All LLC filings are done online and there’s a quick one- to three-day turnaround. It also doesn’t charge franchise tax, although it does have a graduated income tax system. The rates are relatively low — from 1.5% to 5.9%.
New Mexico also has excellent privacy benefits for LLC members. It does not publish member names, addresses or business addresses on public formation documents, allowing for much more anonymity for owners than in states such as Texas.
The table below shows New Mexico’s LLC fee costs.
| Domestic LLC Formation Fee | Foreign (Out-of-State) LLC Formation Fee | Annual Report Fee | Any Extra State-Specific Fees? |
|---|---|---|---|
| $50 | $100 | $0 (no annual report required) | None |
4. Texas
The state of Texas offers many benefits for LLC owners with its business-friendly regulations. While the LLC filing fee is relatively high at $300, there’s no annual report fee when you file your annual report each year. Additionally, Texas doesn’t charge state income tax. There is an annual franchise tax, but it only applies to revenue above $2,470,000. Texas also allows for the formation of series LLCs.
Texas doesn’t offer as many privacy benefits for LLC members as Delaware or Wyoming, but members can keep their names out of the public record by electing to be manager-managed, which means only the manager’s name will be published.
Below are Texas’s LLC fees.
| Domestic LLC Formation Fee | Foreign (Out-of-State) LLC Formation Fee | Annual Report Fee | Any Extra State-Specific Fees? |
|---|---|---|---|
| $300 | $750 | $0 (annual report required but there is no fee) | 0.75% above $2,470,000 in revenue in franchise tax |
5. Florida
Florida, like Texas, offers many tax benefits, including no state income tax and no franchise tax. Florida also has relatively low filing fees. Like Delaware, it allows for series LLCs, meaning you can create an umbrella LLC with series LLC structures within. Like Wyoming, Florida also offers charging order protection for multi-member LLCs, meaning creditors cannot seize LLC assets or management to pay off a member’s debt. Unfortunately, this protection does not apply to single-member LLCs.
But note that Florida doesn’t offer privacy protection like Delaware, Wyoming or New Mexico. Members’ names and addresses are part of the public record when you file the LLC, as well as the registered agent’s name and address.
The table below details Florida’s LLC fees.
| Domestic LLC Formation Fee | Foreign (Out-of-State) LLC Formation Fee | Annual Report Fee | Any Extra State-Specific Fees? |
|---|---|---|---|
| $125 | $125 | $138.75 | None |
Key Decision Factors When Choosing a State to Form an LLC
Deciding where to form an LLC involves several factors.
- Home versus Out-of-State Formation
For most entrepreneurs, it makes the most sense to form your LLC in your home state. If you form your LLC in a foreign state such as Delaware or Wyoming, you’ll pay double filing fees — you’ll have to register as a foreign LLC in your home state, appoint an additional registered agent and pay annual fees in both states.
Out-of-state formation is most logical for business owners who:
- Operate entirely online and/or have no physical presence in any state
- Seek strong privacy laws
- Plan to convert to a corporation in the future
- Taxes and Ongoing Fees
Taxes can make a big difference to your profit margin. States that have no income tax, such as Wyoming, Florida and Texas, can save you thousands of dollars over time. Some states, such as Delaware and Texas, charge a franchise tax. Also pay attention to annual fees — Delaware, New Mexico and Texas have no annual fees, while you’ll pay over $100 every year in Florida.
- Asset Protection and Legal Environment
Some states, such as Delaware, Wyoming and Florida have long-standing reputations for strong business laws and liability protection. Delaware’s General Corporation Law offers predictable pro-business rulings in court judgements. Wyoming and Florida provide charging order protection, meaning creditors can’t seize company assets to satisfy an owner’s debts.
- Privacy Protections
Privacy can be a deciding factor for entrepreneurs who prefer to keep ownership information off public record. Delaware, Wyoming and New Mexico allow anonymity for LLC members, requiring only a registered agent’s name to appear publicly. Texas and Florida list member or manager names in public filings.
- Ease of Reporting
States such as Wyoming and New Mexico offer online filings and quick turnaround times. Delaware and New Mexico don’t require annual report filings. Delaware and Florida have fixed franchise tax and reporting deadlines and offer automatic reminders.
The table below offers a summary of each state’s fees, taxes and privacy levels.
| State Name | Domestic Filing Fee | Annual Report Fee | State Income Tax | Franchise Tax | Privacy Level | Series LLCs |
|---|---|---|---|---|---|---|
| Delaware | $110 | $0 | Graduated 2.2% to 6.6% | $300 | High | Allowed |
| Wyoming | $100 | $60 | None | None | High | Allowed |
| New Mexico | $50 | $0 | Graduated 1.5% to 5.9% | None | High | Not Allowed |
| Texas | $300 | $0 | None | 0.75% above $2,470,000 in revenue in franchise tax | Low | Allowed |
| Florida | $125 | $138.75 | None | None | Low | Allowed |
The listings that appear are from companies from which this website may receive compensation, which may impact how, where and in what order products appear. Not all companies, products or offers were reviewed in connection with this listing.
Frequently Asked Questions for the Best State to Form an LLC in 2026
The best state to form an LLC is the state in which the LLC will be conducting business. But if you plan to move or expand your business, Delaware, Wyoming, New Mexico, Texas and Florida are our picks for the best states to form an LLC. If you plan to conduct business in several states, then you’ll need to form a foreign LLC in each additional state where you conduct business.
The cheapest state to start an LLC is Montana, which has the lowest filing fee in the U.S. at $35.
The best state to form an LLC for an online business is wherever you’re operating the online business from, even though an online business doesn’t technically live in any specific state. For example, if you run your online business from your home office in Virginia, then that’s the state where we recommend you form your LLC.
No, Delaware is not the only state that allows single-member LLCs. At one point in time, there were only a few states that allowed single-member LLCs. Today, every state and Washington, D.C. allow SMLLCs.
*Data accurate at time of publication.
**Legal Disclaimer: This article contains general legal information but does not constitute professional legal advice for your particular situation and should not be interpreted as creating an attorney-client relationship. If you have legal questions, you should seek the advice of an attorney licensed in your jurisdiction.
