7+ Best States To Form An LLC in 2024

Many business owners must start a Limited Liability Company (LLC) to protect their personal assets. However, choosing the right state to form your LLC can save you time and money while providing essential legal protections.

Each state in the U.S. has its rules, taxes, and benefits, making it crucial to research your options.

Delaware, Wyoming, and Nevada often top the list for their favorable business environments.

But there are other few states that are often overlooked.

Understanding the advantages of each state will guide you toward a decision that aligns with your entire business goals.

Whether you’re looking for low formation fees, legal protections, LLC privacy, or tax benefits, this guide will share the best states to form your LLC and what you need to know.

Top 8 Best States for LLC Formation

Below are the best states to form your LLC right now:

State	Best For	LLC Filing Fees	Annual Report Fees
Your Home State	Various benefits	Varies by state	Varies by state
Wyoming	Low taxes, privacy	$100	$60
Delaware	Fast-growing businesses, privacy	$90	$300
New Mexico	Anonymity, Easiest renewal, low costs	$50	$0
Alaska	Tax credits, no state income tax	$250	$100
Nevada	Privacy and lower taxes	$425	$150
Ohio	Affordable ongoing LLC fees	$99	$0
Arizona	Cheap LLC registration	$50	$0

Why Is Forming an LLC in the Right State So Important?

Choosing the right state to form your LLC can significantly impact your business. Each state has different rules regarding fees, taxes, and reporting requirements.

Here are a few reasons why you should always choose a favorable state to form your LLC:

1. Better Legal Protection

The level of legal protection you get can vary from state to state. Take Delaware, for example—it’s a favorite for many businesses because its laws are designed to protect business owners.

If your LLC ever faces a lawsuit, Delaware’s court system is well-equipped with a specialized business court called the Court of Chancery. This court focuses solely on business issues, so you’re dealing with judges who really know their stuff.

Other states like Nevada also offer strong protections, including laws that prevent creditors from seizing your personal assets, like your house or car, to pay off business debts. If you’re concerned about protecting your personal assets, these states might be worth considering.

2. Tax Savings

Taxes can make or break your business, and the state you choose can have a huge impact on how much you end up paying.

For instance, states like Wyoming, South Dakota, and Nevada don’t have state income taxes, which can be a big win for your wallet. If your business is based online or operates across multiple states, forming your LLC in one of these tax-friendly states could significantly reduce your tax burden.

On the flip side, states like California have higher tax rates and stricter regulations, so forming your LLC there might not be the most cost-effective choice unless you’re doing business primarily in California.

3. Privacy Perks

Privacy is a big deal today, especially if you want to keep your personal information off the public record.

States like New Mexico allow for an anonymous LLC, where your name and address aren’t listed in public filings. This is great if you’re looking to keep your business dealings more private.

Nevada is another state that values privacy, offering strong laws that protect the identities of LLC owners. If maintaining your privacy is high on your priority list, looking into states like these could be the way to go.

4. Lower Costs

The cost of forming and maintaining an LLC can add up, so it’s important to consider where you’ll get the most bang for your buck. While Delaware and Nevada are popular choices, they come with higher ongoing costs like annual franchise taxes and fees.

On the other hand, states like Wyoming offer lower filing fees and no state income tax, making it a more budget-friendly option. Even states like Missouri have relatively low costs and straightforward requirements, saving you money in the long run. If you’re a small business or just starting, choosing a state with lower costs can help you keep your expenses down.

5. Easy Operations

Some states make it incredibly easy to form and run an LLC, which can save you a lot of time and headaches. Delaware is a prime example—it’s famous for its business-friendly environment, with a streamlined online filing process and clear, straightforward regulations.

This efficiency can be a real advantage to get your business up and running quickly.

Meanwhile, states like Texas have made big strides in simplifying their business processes, offering online filing and a well-organized system for managing your LLC.

6. Location, Location, Location

If your business operates primarily in one state, it often makes sense to form your LLC there.

For example, forming an LLC in Florida can simplify things if your business is based in Florida. You won’t have to register as a foreign LLC, which means less paperwork and fewer fees. Plus, you’ll be operating under the state’s laws where your business is located, making compliance and legal issues easier to manage.

However, suppose your business has customers or operations across multiple states. In that case, you might consider forming your LLC in a state like Delaware or Wyoming, which are known for their favorable business climates.

7. Legal Advantages

Certain states have a reputation for being especially business-friendly regarding legal matters. Delaware is the gold standard here, with its Court of Chancery specializing in business law. This court doesn’t use juries, often leading to faster, more predictable outcomes in legal disputes. This is why many tech startups, even those based in places like California, choose to incorporate in Delaware.

Nevada is another attractive state for its legal advantages, particularly its strong laws protecting directors and officers from personal liability.

Which is The Best State to Form Your LLC in 2024?

I’m going to explain the pros and cons of these LLC best states:

• Your Home State
• State of Wyoming
• State of Delaware
• State of New Mexico
• State of Ohio
• State of Nevada
• State of Arizona
• State of Alaska

So you can easily decide which state is best for your business.

1. Your Home State (overall best state with numerous benefits)

Forming your LLC in your home state often comes with several practical benefits. This decision makes sense for many entrepreneurs, offering convenience and familiarity.

Pros of Forming Your LLC in Your Home State:

• Familiarity with Laws: You already know the local business regulations, making compliance easier.
• Cost Efficiency: You may avoid extra fees for forming an LLC in another state.
• Local Banking and Funding: Local banks often prefer to work with businesses registered in the same state, which can ease access to loans and credit.
• Easier Tax Management: Conducting most of your business in your home state simplifies tax filings and payment processes.
• Better Local Networking: Building business relationships with local networking groups or chambers of commerce is easier when your business is recognized in your community.

Potential Cons of Forming Your LLC in Your Home State:

• State Taxes: Some states have higher tax rates, which could impact your profits.
• Regulatory Complexity: Depending on the state, regulations may be stricter, adding to compliance costs.
• Limited Growth Opportunities: A smaller market in your home state may limit your business’s potential.
• Registration Fees: Some states charge higher fees for LLC formation or ongoing maintenance.
• Market Knowledge: You might miss out on advantages offered by states known for business-friendly environments, like Delaware or Nevada.

2. Wyoming (Best State To Form an LLC for Low Taxes & Privacy)

Wyoming is a prime choice for forming an LLC due to its favorable tax structure and strong privacy protections. This state is known for its business-friendly environment, which appeals to many entrepreneurs.

Wyoming LLC Pros:

• No State Income Tax: Wyoming does not impose any income tax on personal or corporate earnings. This is a significant advantage for business owners looking to retain more profits.
• Minimal Fees: The state has low filing fees and annual costs, making it affordable to maintain an LLC. The initial filing fee is only $100.
• Strong Privacy: Wyoming offers enhanced privacy for business owners. You can create an LLC without disclosing your identity in public records.
• Flexible Management Structure: You can manage your LLC however you see fit, whether as a member-managed or manager-managed entity.
• Asset Protection: Wyoming provides strong asset protection laws that safeguard your business and personal assets from liabilities.

Wyoming LLC Cons:

• Limited Physical Presence: If your business operates primarily in another state, you may still need to register there. This can add complexity and costs.
• Less Recognition: Although becoming more popular, Wyoming may be less recognized than states like Delaware. This may matter for certain types of partnerships or contracts.
• Requirements for Foreign LLCs: If you plan to operate in another state, your Wyoming LLC might also need to comply with that state’s rules.

3. Delaware (Best for fast-growing businesses & LLC Privacy)

Delaware is a popular choice for forming an LLC, especially for fast-growing businesses. It offers advantages like flexibility in management and strong privacy protections. Many entrepreneurs choose Delaware because of its favorable legal environment.

Delaware LLC Pros:

• Business-Friendly Laws: Delaware has laws that support businesses, making it easy for you to start and run your LLC efficiently.
• Privacy Protection: You don’t have to disclose the names of the LLC members in the public records. This adds a level of privacy that many business owners find appealing.
• No State Income Tax: Delaware does not tax LLCs that operate outside the state. This is beneficial if your business is based elsewhere but registered in Delaware.
• Fast Formation Process: You can form your LLC quickly, often in just a day or two. This is great if you want to launch your business swiftly.
• Flexible Management Structure: Delaware allows members to manage the LLC, allowing you to structure your business as you see fit.

Delaware LLC Cons:

• Annual Franchise Tax: Delaware LLCs must pay an annual franchise tax, which could be a drawback if you want to minimize expenses.
• Foreign Qualification: If your LLC operates in another state, you must register as a foreign entity, which adds to your operating costs.
• Complex Regulations: While the laws are business-friendly, they can be complex. You might need professional help to navigate the legal landscape.

4. New Mexico (Best for Anonymous LLC, cheapest formation fees & no annual reports)

New Mexico stands out as an excellent choice for forming an LLC. It offers advantages such as anonymity, low formation fees, and no annual report requirement, making it appealing to many entrepreneurs.

New Mexico LLC Pros:

• Anonymity: New Mexico allows you to form an anonymous LLC. You do not need to disclose the names of owners to the state. This means your personal information remains private.
• Low Formation Fees: Forming an LLC in New Mexico costs approximately $150. This is one of the lowest state fees, helping you save money when starting your business.
• No Annual Reports: Unlike many states, New Mexico does not require annual reports or fees. This simplifies ongoing compliance and saves you time and money each year.
• Flexible Business Laws: New Mexico provides a business-friendly environment. Its flexible laws make it easier to manage your LLC.

New Mexico LLC Cons:

• Limited Local Market: New Mexico has a smaller population and economy than bigger states, which might limit market opportunities for some businesses.
• Less Name Protection: If your desired business name is already taken, forming an LLC may be challenging. The state does not offer as strong name protection as others.
• Potential Out-of-State Issues: If you are located outside of New Mexico, you might run into issues when trying to operate there. This can complicate matters if your business needs a local presence.

5. Ohio (Best for affordable LLC annual report fees)

Ohio stands out for its affordable annual report fees. This feature and other benefits make it an attractive choice for many business owners looking to form an LLC.

Ohio LLC Pros:

• Low Annual Fees: Ohio has one of the cheapest annual report fees at just $0. This can save you money in the long run compared to other states.
• Simple Registration Process: Forming your LLC in Ohio is straightforward. You can easily file online or by mail, making it accessible for new business owners.
• Business-Friendly Environment: Ohio offers a supportive environment for businesses, with resources and programs that help small businesses grow.
• No Franchise Tax: Unlike some states, Ohio does not impose a franchise tax on LLCs, allowing you to keep more of your earnings.
• Access to Markets: Ohio’s location provides a strategic advantage for reaching various markets across the Midwest, supporting business expansion.

Ohio LLC Cons:

• State Taxes: While no franchise tax exists, Ohio’s income tax can impact your profitability.
• Regulatory Compliance: Like all states, Ohio has regulations you must follow. Staying compliant can require time and effort.
• Variable Local Taxes: Local municipalities may impose their taxes, which can vary. This adds a layer of complexity to tax planning.
• Limited International Reputation: While a solid choice, Ohio might not have the same prestige as states like Delaware, known for business incorporation.
• Weather Considerations: Ohio experiences cold winters, which may impact certain types of businesses and their operations.

6. Alaska (best for tax credits and no state income taxes)

Alaska is an appealing choice for forming an LLC, especially for those looking for tax benefits. The state offers a unique combination of no individual income tax and various tax credits, making it a financially savvy option.

Alaska LLC Pros:

• No State Income Tax: One of Alaska’s biggest draws is that there is no state income tax. This means more of your profits remain intact.
• Tax Credits: Alaska offers several tax credits that can benefit businesses. For instance, there are credits for investment in oil and gas, fisheries, and renewable energy.
• Business-Friendly Regulations: The state has many supportive regulations, making it easier for LLCs to establish and operate.
• Privacy Protection: Alaska provides good privacy for business owners. You can keep your personal information out of public records, which helps protect your identity.
• Unique Opportunities: The state has vast natural resources, which open doors for businesses in industries like tourism, fishing, and oil extraction.

Alaska LLC Cons:

• High Cost of Living: While there are tax advantages, the overall cost of living in Alaska can be high. This may impact employee wages and company expenses.
• Remote Location: The geographical location can be a challenge. It may complicate shipping and logistics, depending on your business model.
• Limited Market Size: Alaska has a smaller population than other states, which can mean a limited customer base.
• Weather Conditions: Harsh winter weather can disrupt operations and affect your business plans.
• Regulatory Complexity: Understanding the specific regulations can be complex. Navigating state and local laws may require additional time or assistance.

7. Nevada (Best for potentially lower taxes and privacy)

Choosing Nevada for your LLC could be a smart move, especially if you value lower taxes and privacy. The state offers many advantages that can benefit new and established businesses alike.

Nevada LLC Pros:

• No State Income Tax: Nevada does not impose a state income tax on individuals or corporations, allowing you to retain more of your earnings.
• Privacy Protection: You are not required to disclose the names of members or managers in public records, offering a level of anonymity.
• Business-Friendly Environment: The state has minimal regulations and a straightforward setup process, making it easier to start your business.
• Flexible Management Structures: You can set up your LLC with varied management structures, allowing for both member-managed and manager-managed options.
• Strong Asset Protection: Nevada has strong laws that protect your personal assets from business debts and lawsuits.

Nevada LLC Cons:

• Higher Initial Fees: Although there are no state taxes, the initial formation fees and annual business license fees can be higher than in other states.
• Limited Local Markets: If your business primarily serves a local market, operating in Nevada may not be ideal, especially if you engage with customers in other states frequently.
• Compliance Requirements: Even though it’s business-friendly, you must maintain good standing through annual reports and licenses, which can take effort and time.
• Potential Misleading Expectations: Some may assume that forming an LLC in Nevada automatically brings benefits, but your specific business needs and operations should guide your decision.

8. Arizona (Best state for cheaper LLC registration)

Arizona is a great choice for forming an LLC if you want to save on registration costs. The state offers a simple setup process and has some attractive features that can benefit new business owners, especially regarding expenses.

Arizona LLC Pros:

• Low Filing Fees: Arizona has relatively low filing fees for creating an LLC. This makes it affordable compared to many other states. You’ll pay around $50 to file the Articles of Organization.
• Simple Registration Process: Registering your LLC is straightforward. You can complete the filing online, saving you time.
• No State Income Tax: Arizona does not tax your LLC’s profits at the state level. This gives you more flexibility in how you manage and distribute earnings.
• Business-Friendly Environment: Arizona encourages business growth with various resources and support programs. This atmosphere can benefit startups and expanding companies.
• Diverse Economy: The state’s economy is growing and diverse, with opportunities in tech, healthcare, and tourism. This can create a supportive network for your business.

Arizona LLC Cons:

• Annual Reports Required: While the filing fees are low, you’ll need to file an annual report for your LLC. This requirement can be an extra task to keep track of yearly.
• Sales Tax: Arizona has a state sales tax, which could increase your costs depending on your business model.
• Limited Privacy: Arizona requires certain information about your LLC to be public. If you prefer privacy, this might be a concern.
• Competition: The growing economy means you may face stiff competition in certain industries. It’s essential to research your market before deciding.
• Hot Climate: The warm climate can impact some industries. This might be something to consider if your business relies on weather conditions.

Criteria to Consider When Choosing the Best State to Form an LLC

Selecting the right state to form your LLC involves examining various important factors. These factors can significantly impact your business’s growth, expenses, and protection.

Here are key criteria to keep in mind when selecting the best LLC states.

Privacy and Anonymity

If keeping your personal information private is important, you’ll want to choose a state that supports LLC anonymity. New Mexico, Delaware, and Wyoming are top picks.

These states (especially New Mexico) keep details about your business and its owners under wraps, so you don’t have to worry about your name appearing in public records. If privacy is a big deal for you, look for states that offer strong protection for LLC members.

Think Beyond Initial Fees

I agree that low startup costs are tempting, but don’t forget to think about the long haul.

Some states may have low formation fees but higher ongoing costs. For instance, Nevada has higher business license fees that add up annually. It’s smart to evaluate the total cost of keeping your LLC running over several years, not just the initial fee.

Tax Benefits and Drawbacks

Taxes can make a huge difference to your bottom line. States like Nevada and Wyoming are great because they don’t have state income taxes, which can save you a lot of money.

On the flip side, states like California have higher tax rates that could eat into your profits. Look into the tax structure in your chosen state, including corporate income taxes and franchise taxes, to see how it stacks up.

Liability Protection from Lawsuits

The main reason for forming an LLC is to protect your personal assets from business debts and lawsuits. While most states offer solid liability protection, the specifics can vary. States with business-friendly laws, like Delaware, tend to offer strong protections. Research how each state handles liability to ensure it aligns with your needs.

Compliance Requirements

Compliance can vary a lot from state to state. Some states have more complex regulations and require extensive paperwork, adding to your administrative workload. For example, California has more stringent regulatory requirements. Before forming your LLC, familiarize yourself with the state’s compliance requirements to avoid penalties and keep your LLC in good standing.

Frequently Asked Questions

What is the Best State to Form an LLC for Amazon FBA and Ecommerce?

For Amazon FBA and ecommerce businesses, Wyoming is a great option. Its lack of state income tax and low annual fees help decrease costs. The state’s business-friendly environment also supports ecommerce growth.

What is the Best State to Form an LLC for a real estate business?

Delaware and Wyoming are top choices for real estate LLCs. Delaware provides strong asset protection and a flexible legal framework. Wyoming offers tax benefits and low fees, which can also be advantageous for real estate investments.

What is the Best State for Anonymous LLCs?

New Mexico allows for the formation of anonymous LLCs. This means your name does not appear in public records. This can be beneficial for those seeking privacy in their business dealings.

What is the best state in which to set up an LLC as a foreigner?

Delaware, New Mexico, Wyoming, and Ohio are the best states for foreigners to set up an LLC. Delaware is popular for its established laws. New Mexico offers anonymity, while Wyoming provides low fees. Ohio is known for its business-friendly regulations.

Do I need to set up an LLC where I do business in each state?

Typically, you do need to register your LLC in each state where you conduct business. This includes states where you have a physical presence or sell goods. You will register as a foreign LLC in those states.

What are the differences between Domestic LLCs vs. Foreign LLCs?

A Domestic LLC is registered in the state where you conduct business. A Foreign LLC is formed in one state but operates in another. Different states have varying rules and taxes, which can impact your business.

Which states don’t tax personal income?

States that do not tax personal income include Wyoming, Washington, Texas, Tennessee, South Dakota, Nevada, Florida, and Alaska. These states can be attractive for LLC owners looking to minimize tax liabilities.

What’s the better between Wyoming LLC and New Mexico LLC?

Wyoming offers strong asset protection, privacy through anonymous LLCs, and no state income tax. New Mexico provides excellent anonymity, no annual reports, and lower ongoing costs. Choose Wyoming for robust protection and New Mexico for lower fees and minimal reporting.

What’s the difference between Wyoming LLC vs Nevada LLC?

Wyoming is cost-effective with low fees and strong privacy. Nevada offers similar tax benefits but has higher ongoing costs and fees. Wyoming is better for budget-conscious owners, while Nevada suits those needing specific legal benefits.

What’s the difference between Wyoming LLC vs Delaware LLC?

Wyoming is affordable, with strong privacy and asset protection, ideal for small businesses. Delaware is known for its business-friendly legal system, making it a top choice for larger companies or those seeking investment. Choose Wyoming for simplicity and Delaware for legal advantages.

What’s the better between Wyoming LLC vs Texas LLC?

Wyoming is great for privacy, low costs, and simplicity. Texas offers no state income tax and a strong economy but has more complex compliance. Wyoming suits those prioritizing privacy and low fees, while Texas is better for businesses operating within the state.

Is an LLC Registered Agent Required in Every State It Does Business in?

Yes, most states require an LLC to have a registered agent. The agent is responsible for receiving legal documents and ensuring compliance with state laws.

How Long Does It Take To Get an LLC in Most States?

The time it takes to form an LLC varies by state. Generally, it can take a few days to a few weeks. Some states offer expedited services for an additional fee.

How does the cost of forming an LLC vary by state?

The cost of forming an LLC can differ considerably between states. Filing fees range from as low as $40 in Kentucky to several hundred dollars in other states. When choosing a state, consider both initial and ongoing costs.