Should you form your LLC in your home state, Delaware, Nevada, or Wyoming? This comprehensive guide analyzes the real costs and benefits to help you make the right choice for your business.
Avoid $50-$750+ annual foreign qualification fees and paperwork
File in one state only, no multi-state tax complications
Legal disputes handled in familiar local courts
Easier banking relationships and streamlined local licensing
| Factor | Your Home State | Delaware | Nevada | Wyoming |
|---|---|---|---|---|
| Formation Fee | Varies ($50-$500) | $90 | $75 | $100 |
| Annual Fees | Varies ($0-$800) | $300 | $350 | $60 |
| Foreign Qualification | Not required | $50-$750+/year | $50-$750+/year | $50-$750+/year |
| Tax Complexity | Simple (1 state) | Complex (2 states) | Complex (2 states) | Complex (2 states) |
| Total Annual Cost* | $0-$800 | $350-$1,050+ | $400-$1,100+ | $110-$810+ |
Important: These scenarios apply to less than 5% of new LLCs. Don't let marketing convince you that you need Delaware, Nevada, or Wyoming for a typical small business.
VCs often prefer Delaware LLCs/Corps due to established legal precedents
Consider Delaware if raising significant VC funding
Most public companies incorporate in Delaware for legal advantages
Delaware strongly preferred for IPO plans
If you'll operate in multiple states anyway, location matters less
Choose based on total tax burden and compliance costs
Some states offer unique tax advantages for certain business types
Consult tax professional for complex situations
Wyoming offers strong privacy protections and low annual fees, but limited practical benefits for most businesses
Consider Wyoming only if privacy is critical and you understand the limitations
If you'll have physical offices, employees, or inventory in multiple states from day one
Choose based on total tax burden and operational complexity, not customer locations
Wyoming is often marketed as the "most private" state for LLC formation, with claims about anonymous ownership and minimal disclosure requirements. Here's what's true and what's misleading:
Reality Check: While Wyoming offers genuine privacy protections at the state level, banks, courts, and federal agencies can still require ownership disclosure when needed. Privacy benefits are real but not absolute.
Bottom Line: Wyoming offers legitimate privacy benefits and the lowest annual fees, but most businesses don't need these advantages enough to justify the double compliance burden.
• Formation: $70
• Annual franchise tax: $800
• Foreign qualification: $0
• Formation: $90
• Delaware annual fee: $300
• CA foreign qualification: $70
• CA franchise tax: $800
• Formation: $75
• Nevada annual fee: $350
• CA foreign qualification: $70
• CA franchise tax: $800
• Formation: $100
• Wyoming annual fee: $60
• CA foreign qualification: $70
• CA franchise tax: $800
Plus simplified tax filing, local court jurisdiction, and easier banking relationships. Even Wyoming, with its low fees, costs more due to foreign qualification requirements.
This is one of the most common misconceptions about LLC formation. Here's why customer location doesn't determine where you should form your LLC:
Example: A Texas-based consultant with an LLC formed in Texas can serve clients in California, New York, and Florida without any issues. The consultant pays taxes in Texas and follows Texas LLC laws, regardless of where customers are located.
Reality: LLC laws are similar across states. Delaware's advantages apply mainly to corporations going public, not small LLCs.
Reality: You still pay taxes where you operate. Nevada and Wyoming just add another state's compliance requirements on top.
Reality: If you live and work in a state, you're subject to its taxes regardless of where your LLC is formed.
Reality: Delaware's advantages are specific to large corporations and public companies, not typical small businesses.
Reality: Your LLC's formation state has nothing to do with where you can do business or have customers. You can serve customers anywhere regardless of formation state.
Reality: Business licensing depends on your business type and activities, not where your customers are located. Most online businesses don't need licenses in customer states.
If yes, consider Delaware. If no, continue.
If yes, form in your home state. If no, continue.
If yes, consult a professional about Delaware, Nevada, or Wyoming. Otherwise, form in your home state.
Before you start: Make sure you understand why not to use LegalZoom and other expensive services that charge hidden fees for the same formation process.
Transparent pricing, real specialists, and guidance for 10 key states (CA, TX, FL, PA, IL, OH, GA, NC, MI, NJ).