Best state for your LLC: usually the one where you do business

Start looking into forming an LLC in the USA and you'll soon run into rankings: Wyoming is the cheapest, Delaware the best, Florida the friendliest. For a company that genuinely does business in the USA, these lists are often misleading. An LLC with customers, an office or employees has to register in the state where it operates, wherever it was formed. This page compares the six states where European founders most often form their LLC, using the fees the states themselves charge. It also shows you which questions should drive your decision. You'll find all packages with formation, EIN, bank account and ongoing support under Form an LLC; the packages for each state are under Delaware, Wyoming, Florida, Texas, California and New York.

1State of formation and state of business: two separate questions

In the USA, company law is a matter for the individual states. Each state has its own LLC act, its own registry and its own fees. The state where you form the LLC is its state of formation. It sets the law that governs the relationship between the members, and it collects its fee or tax every year.

The state where the LLC actually does business is a separate matter. Every state requires a company from another state to register before doing business there. Texas sets this out in § 9,001 of its Business Organizations Code. Florida prohibits an out-of-state LLC from operating without a Certificate of Authority. California requires registration with the Secretary of State, plus the annual $800 tax from every LLC doing business there. Registering brings a second Registered Agent, a second annual report and a second set of fees.

That gives you the basic rule: if your business takes place in a single state, that state is usually the right state of formation too. Another state of formation only pays off if its law gives you something worth the double effort. How registering in a second state works is explained in the article Foreign Qualification.

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2What the six states charge at formation and every year

The table shows the fees and taxes each state charges itself. Registered Agent, accountant and federal taxes come on top everywhere. Three things stand out.

First, formation fees are close together, from $70 in California to $300 in Texas. What makes a state expensive or cheap is what comes back every year. Delaware charges the LLC a flat $400 tax due June 1, with no annual report. Wyoming requires an Annual Report with a License Tax of at least $60, or two hundredths of a percent of assets located in Wyoming above $300,000. Florida charges $138.75 for the annual report, and if you miss May 1, you pay a $400 late fee.

Second, California is the outlier. Every LLC formed, registered or doing business there pays $800 in Annual Tax, even in its first year, plus an additional fee once California income reaches $250,000. For first tax years beginning in 2027 through 2029, the first-year tax drops to $400. The full calculation is under California LLC costs.

Third, New York has a requirement none of the other five states have. Within 120 days of formation, the LLC must publish notice of its formation in two newspapers for six weeks and then file a Certificate of Publication for $50. Miss this, and the LLC's authority to do business in New York is suspended. More under Form a New York LLC.

For an overview of all fees and running costs calculated over several years, see the article Annual costs of a US company.

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3What a second registration costs

The second table shows what happens when you form in one state and do business in another. Take an example: you form in Wyoming because running costs are low there, and open your business in Florida. You then pay the License Tax in Wyoming every year, the Certificate of Authority in Florida plus its Annual Report every year, and you need a Registered Agent in both states. Wyoming's cost advantage is gone, and you have a second set of deadlines on top.

Skip registration in the state where you do business and you risk more than fees. Florida collects all missed fees and imposes a penalty of $500 to $1,000 for each year without authority; the LLC cannot sue in Florida until it registers. Wyoming sets a $5,000 penalty for companies operating there without authority, plus fees, License Taxes and 18 percent interest. In California, the Annual Tax is owed as soon as the LLC does business there, registered or not.

Each state decides under its own law when an LLC is doing business there. An office, a warehouse, employees or regular local business are the classic signs. California also sets fixed thresholds for in-state sales, property and payroll.

4Wyoming, Texas and Florida: when your business is there

4.1Wyoming

Wyoming created the LLC in 1977 with its own statute and, according to its Secretary of State, calls itself the founder of the LLC law. The state is cheap and fast: an LLC formed online is active immediately, and a paper filing takes no more than 15 business days. According to the Wyoming Business Council, there is no corporate income tax, no state income tax and no franchise tax. For founders whose business genuinely operates in Wyoming, that is a strong package. For everyone else, the low price only helps as long as no second registration becomes necessary. More at Forming a Wyoming LLC.

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4.2Texas

Texas costs more to form in, $300 for the Certificate of Formation, and is inexpensive to run. The Texas Constitution prohibits a tax on the income of individuals, including their share of a partnership's income. The LLC itself is subject to the state franchise tax at rates of 0.375 percent for retail and wholesale and 0.75 percent for everything else, but only from annual revenue of $2.65 million, according to the Comptroller's figures for report years 2026 and 2027. Below that threshold, the LLC files its Public Information Report by May 15. The names of the managers, or of the members if there are no managers, are public in the Certificate of Formation. More at Forming a Texas LLC.

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4.3Florida

Florida combines low costs with a large market. The state constitution prohibits an income tax on its residents beyond what can be credited against federal taxes. An LLC that is not taxed as a corporation pays no corporate income tax in Florida. In return, the annual report is mandatory by May 1, and it names a person who manages the LLC. For families moving to Florida, the LLC there is often the heart of the visa. More at Forming a Florida LLC.

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5Delaware: when the law tips the balance

Delaware is the best-known state of incorporation in the US. According to the Division of Corporations' 2025 annual report, more than 2.28 million entities are registered there, including more than two thirds of the Fortune 500. The reason is the law: an LLC statute that gives maximum effect to the members' freedom of contract, a public formation document that names only the company name, registered office and Registered Agent, and the Court of Chancery, a business court whose decisions American attorneys and investors know well.

Delaware brings no tax advantage to an LLC doing business in another state. The LLC pays its $400 in Delaware and the levies of the state where it operates. Delaware is therefore worth it mainly in three cases: when investors expect Delaware law, when several members negotiate a detailed LLC Agreement, and when a holding company is meant to sit above several US companies later on. How formation works there is explained at Forming a Delaware LLC, and the holding at Delaware holding for entrepreneurs and families.

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6California and New York: expensive, but sometimes the only option

California and New York are the states many founders want to avoid. But for a business whose customers, employees and office are there, there is no way around them. A Delaware or Wyoming LLC doing business in California pays the same $800, plus the costs of its home state. So if you work there, you usually form there.

New York has a feature many founders like: there is no Registered Agent requirement. The LLC designates the Secretary of State as its agent for service of process and gives an address to which mail is forwarded. The catch is publication in two newspapers, and according to the Department of State, the members must adopt a written Operating Agreement no later than 90 days after formation. For running costs, there is the Biennial Statement, $9 every two years, and, with New York income, the annual fee on Form IT-204-LL starting at $25.

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7Four questions that decide your choice

The fee table is the last step, not the first. Four questions come before it.

Where does your business take place? Where are your customers, where do you work, where is your warehouse, where do you hire? That state is your starting point. If you don't have a location yet, you'll find the operational criteria in our recommended locations and on the page Which US state is the best location.

Do you need a visa? With an E-2 or L-1, the company carries the application, and its location often becomes where you live. Formation and visa then belong in one plan, which is what the visa roadmap for your formation is for.

Who are the members? If you form on your own or with your company at home, the state where you do business is usually enough. If investors or several partners come on board, there is a lot to be said for Delaware.

How much should be public? Delaware and Wyoming name no members in the formation document. Florida names a person who manages the LLC in the annual report, Texas names the managers or members in the Certificate of Formation, and California names the managers or all members in the Statement of Information.

There is one question this page deliberately leaves out: which state suits an LLC that does no business in the US at all. That is a different tool with different rules, and it is the subject of our sister site zerotax.llc. For an LLC with real business in the US, we form in any of the six states; get started at Form an LLC.

In short

• An LLC with real business registers in the state where it operates; if you form somewhere else, you pay two states.
• Wyoming and Delaware are inexpensive and discreet to form and run; California, at $800 a year, and New York, with its publication requirement, are expensive.
• Florida, Texas and Wyoming levy no state income tax on individuals; Texas only taxes companies with the franchise tax from $2.65 million in revenue.
• Delaware pays off when investors, several members or a future holding company need the state's law.
• In practice, a visa, where you live and your customers usually decide the choice long before any fee table.

How we help you

• Form an LLCThe US LLC with a permanent establishment, turnkey in six states.
• Company formation consultationEntity type, state and tax consequences, before you commit.
• Visa Roadmap for Company FormationFormation and visa in one plan, so the company carries the visa.
• Tax structureA clean structure between parent company and US subsidiary, or between you and your US company, coordinated with your accountant.