Which State Should a Non-Resident Choose for an LLC or Corporation?
Wyoming, Delaware, New Mexico, Arizona or your customers' state? How non-residents should choose the best US state for an LLC or corporation, with costs and a simple decision guide.
"Which state should I form my company in?" is the first question almost every non-resident asks us. The internet's answer is usually "Wyoming" or "Delaware", and for many founders one of those is right. But the best choice depends on what your business does, where it operates and what your plans are.
This guide explains what actually changes from state to state, compares the popular options, and gives you a simple way to decide.
What actually differs between states
Federal tax rules are the same whichever state you choose. What differs is mostly state-level:
- Formation fee: a one-time fee to file your company, from about $50 to $500.
- Annual obligations: some states charge an annual report fee or franchise tax; a few charge nothing for LLCs.
- State taxes: some states have no corporate or personal income tax; others tax income earned in the state.
- Privacy: some states publish owner or manager names; others do not require them in public filings.
- Legal environment: for corporations raising investment, the predictability of a state's corporate law matters.
- Special rules: for example, a newspaper publication requirement after forming an LLC in New York or, in some counties, Arizona.
The rule that overrides everything: where you actually do business
If your company will have an office, employees, a warehouse or other real presence in a particular state, that state will usually require your company to register there, whatever state you formed it in. This is called foreign qualification (it has nothing to do with your nationality).
In that situation, forming in Wyoming and then registering in, say, Texas means paying two sets of state fees. Forming directly in the state where you operate is often simpler and cheaper.
If your business is run from outside the USA and sells online, you generally have no such presence, and you are free to pick a state for cost, privacy and convenience.
The popular choices compared
| State | LLC filing fee | Ongoing state cost for an LLC | State income tax on the LLC | Known for |
|---|---|---|---|---|
| Wyoming | $100 | Annual report, from $60 | None | Low cost, privacy, simple |
| Delaware | $110 | $300 annual tax | Not for out-of-state income | Investor-friendly corporate law |
| New Mexico | $50 | No annual report | Generally not for out-of-state income | Lowest ongoing cost |
| Arizona | $50 | No annual report | Generally not for out-of-state income | Low maintenance |
| Florida | $125 | Annual report, about $139 | No personal income tax | Large market; Latin America trade |
| Texas | $300 | Franchise tax report (no tax below threshold) | Margin tax above threshold | Large market; no personal income tax |
Figures are standard state fees for an LLC and change from time to time; we confirm them when you order. Compare all states on our company formation page.
Wyoming
The default choice for many online businesses. Low formation and annual fees, no state income tax, owner names not required in public filings, and a straightforward annual report. A Wyoming LLC with EIN costs $249 all-in with us. Read Wyoming LLC for non-residents.
Delaware
The standard for corporations that will raise venture capital, because investors and their lawyers know Delaware law well. For a simple LLC, Delaware's $300 annual tax makes it more expensive than Wyoming without much practical benefit. Read Delaware LLC vs Wyoming LLC and why startups choose a Delaware C-Corp.
New Mexico
The lowest ongoing cost: a $50 filing fee and no annual report for LLCs. Popular with founders who want the absolute minimum maintenance. Some banks and platforms are slightly less familiar with it than with Wyoming or Delaware, but it is a perfectly valid choice. Read New Mexico LLC for non-residents.
Arizona
Also $50 to form and no annual report for LLCs, with a fast-growing economy around Phoenix. There is a publication requirement after formation unless the company's address is in certain counties, which we handle for you. See why form an LLC in Arizona.
Florida, Texas, New York, California
Choose these mainly when you will actually operate there. They cost more to form or maintain (California has an $800 minimum annual tax; New York has a publication requirement), but they make sense when you have staff, stock or an office in the state. See Florida, Texas and New York.
LLC or corporation changes the answer
- LLC: Wyoming, New Mexico or Arizona for low cost; Delaware only if you expect to convert to a corporation and raise money soon.
- Corporation (Inc): Delaware if you plan to raise investment or issue stock options; Wyoming if you want a low-cost corporation without investor requirements. See Wyoming vs Delaware corporation.
Not sure which entity you need? Read LLC or Inc for non-residents.
A simple decision guide
- Will you have an office, staff or inventory in a specific state? Form there.
- Will you raise venture capital or give stock options? Delaware corporation.
- Online business run from abroad and want low cost and privacy? Wyoming LLC.
- Want the lowest possible annual cost? New Mexico or Arizona LLC.
- Selling physical goods with US warehouses (for example Amazon FBA)? Your formation state matters less than sales tax registration; Wyoming is common. See Amazon FBA with a US LLC.
What it costs over three years
Formation fees get the attention, but the annual costs are what you live with. Here is a rough comparison of state fees only for an LLC over its first three years (excluding registered agent fees, which apply in every state, and excluding any tax on actual in-state income):
| State | Year 1 | Years 2 and 3 | Approximate 3-year state fees |
|---|---|---|---|
| New Mexico | $50 | No annual report | about $50 |
| Arizona | $50 (plus publication in some counties) | No annual report | about $50 to $150 |
| Wyoming | $100 | Annual report from $60 each year | about $220 |
| Texas | $300 | Franchise tax report; no tax below the revenue threshold | about $300 |
| Florida | $125 | Annual report about $139 each year | about $400 |
| Delaware | $110 | $300 annual tax each year | about $710 |
| California | $70 | $800 minimum annual tax each year | about $2,400 or more |
The gap looks small in year one and grows every year. That is why Delaware rarely makes sense for a simple LLC, and why California should only be chosen when you genuinely operate there.
Three common founder profiles
A software or services founder in India selling to clients worldwide. No US office, no US staff, clients pay by bank transfer or Stripe. A Wyoming LLC is usually the right fit: low cost, owner privacy, and familiar to banks and payment platforms. New Mexico is a good alternative if minimum maintenance is the priority.
An e-commerce seller using Amazon FBA or a US 3PL warehouse. Inventory sitting in US warehouses can create sales tax obligations in the states where it is stored, whatever state the company is formed in. The formation state matters less than getting sales tax registrations right. Most of these sellers choose Wyoming and then register for sales tax where required. Read sales tax economic nexus for online sellers.
A startup founder planning to raise money from US investors. Investors and accelerators almost always expect a Delaware C-Corporation. Forming an LLC first and converting later is possible but adds cost and paperwork, so if fundraising is the plan, start with the Delaware corporation. Read LLC or Inc for non-residents.
Privacy: what is public and what is not
Every state publishes the company's name, its registered agent and its filing history. What varies is whether owner or manager names appear in the public record:
- Wyoming and New Mexico do not require member names in the formation filing, so owners are generally not listed publicly.
- Delaware also does not require member names for an LLC.
- Florida, Texas and several other states list managers or authorised persons in public filings.
Privacy is about public records, not about hiding from banks or tax authorities. Your bank, the IRS (through the EIN and Form 5472) and the federal beneficial ownership rules, where they apply, will still know who owns the company.
Can you change state later?
Yes, but it is not free. Many states allow a company to move (often called domestication or conversion) while keeping the same legal entity, provided both the old and new state permit it. Otherwise the alternative is forming a new company in the new state and closing the old one, which means new bank accounts and platform updates. Changing entity type is a separate question; see converting an LLC to a C-Corp.
Because moving involves filings in two states and updates with the IRS, your bank and your payment platforms, it is much easier to choose well at the start. If your plans are uncertain, tell us and we will pick the option that leaves you the most flexibility.
Myths to ignore
- "Wyoming means no US tax." No. State choice does not change federal tax. A foreign-owned LLC still files its federal returns, including Form 5472.
- "Delaware is required for a serious company." Only for venture-backed corporations, in practice.
- "Banks only accept Delaware or Wyoming companies." Banks care far more about your documents and business than your state.
Frequently asked questions
Does my state choice affect my federal tax?
No. Federal tax depends on your entity type, how the company is classified and whether its income is connected with the USA. The same federal rules apply in all 50 states.
Do I need to live in, or visit, the state I choose?
No. Non-residents can form a company in any state without visiting. You need a registered agent with a physical address in that state, which we provide for the first year.
Which state do banks prefer?
Banks focus on your documents, your business activity and the owner's profile. Wyoming, Delaware, New Mexico and Florida companies are all routinely accepted. See US business bank accounts for non-residents.
Can I sell to customers in every state with a Wyoming LLC?
Yes. Selling online to customers across the USA does not by itself require registering in each state. Separate rules apply to sales tax once your sales into a state pass its thresholds, and to physical presence such as staff or inventory.
How UCB helps
Tell us what you sell, where your customers are and what your plans are, and we will recommend a state, free of charge. Then we form the company, provide the registered agent, obtain your EIN and, if you choose a bank package, open your US business bank account.
Need help choosing? WhatsApp us at +91 8105 199 399 or email info@ucbsolutions.com with a short description of your business, and we will recommend the best state for you.
Let our experts handle it for you
Every business is different. Message us with your country, business type and goals, and we will recommend the right structure, state and package. We do the work; you focus on your business.
This article is general information for non-resident business owners and is not legal or tax advice. Rules and fees change; contact us to confirm what applies to your situation.
