For any non-U.S. founder, the best states to form an LLC are Wyoming, Delaware, or New Mexico. These states are popular for a reason. They offer zero state income tax for non-residents, strong privacy protections, and low annual costs, making them ideal for international entrepreneurs.
Choosing the Right State to Form Your LLC#
Deciding where to form your LLC is the first critical step for a non-U.S. entrepreneur entering the U.S. market. This choice impacts annual costs, privacy, and the legal protections your business will have for years. Your decision is not just about the cheapest filing fee.
This choice connects to understanding legal entities. It is worth reviewing how different types of company structures can impact your long term success.
This first choice sets the foundation for your U.S. operations. You must consider ongoing franchise taxes, personal asset protection, and whether a state allows private ownership details.
Wyoming is a top choice for its low costs and strong privacy. The filing fee is only $100, and the annual report costs as little as $60. Compared to states with high franchise taxes, the savings are significant. Wyoming also offers excellent owner privacy, keeping your personal information out of public records.
Evaluating Key Factors for International Founders#
When picking a state for your LLC, look beyond the initial setup fee. For international founders, the most important factors are long term costs, privacy, and tax rules. A state with a low formation cost might have high annual franchise taxes that add up quickly.
It is also crucial to understand your tax obligations. As a non-resident without U.S. operations, you can often avoid state income tax. However, every U.S. LLC has federal tax reporting duties. Our guide on how to start your LLC breaks down these initial steps.
Costs and Compliance#
The total cost of ownership is a smarter metric than the initial filing fee. Some states seem cheap upfront but become expensive over time. You need to balance the initial investment with the ongoing financial commitment.
The key is to analyze the five year cost of an LLC. A state with a $50 filing fee but a $300 annual tax is more expensive than one with a $100 filing fee and a $60 annual report fee after just one year.
In 2023, the U.S. saw a record 5.5 million new business applications, showing a strong entrepreneurial spirit. This boom is fueled by states like Colorado and Florida that offer fast online filings and low initial fees, making them popular for e-commerce sellers. You can discover more insights about U.S. business formation trends to see the full picture.
Privacy and Asset Protection#
Beyond costs, asset protection and owner privacy are critical. Certain states, like Wyoming and New Mexico, allow "anonymous LLCs," where owners' names do not appear on public records.
This creates a strong layer of privacy and separates your personal assets from business liabilities, a major advantage for global founders. This structure helps shield your personal finances if the business faces legal issues.
Comparing the Top States for Your LLC#
For non-U.S. founders, the choice of where to form an LLC usually comes down to Wyoming, Delaware, and New Mexico. Each state has unique benefits. Your decision depends on whether you value low costs, privacy, or attracting investors.
Think of the decision as balancing a few core factors.
It always comes back to these three pillars: set up and maintenance costs, state tax handling, and the level of personal information protection.
Wyoming: The Privacy and Low-Cost Leader#
Wyoming is known as the best state for asset protection and anonymity. It is one of the few places allowing truly anonymous LLCs, keeping owner details private. For an international entrepreneur, that is a powerful privacy layer.
Wyoming is also very affordable to maintain. The annual report fee is just $62, and the state has no income tax. This combination of low overhead and strong privacy makes it a favorite for e-commerce sellers, remote freelancers, and holding companies. We explore this further in our guide comparing a Wyoming vs Delaware LLC.
Delaware: The Corporate Gold Standard#
Delaware is the top name in U.S. business. Over 60% of Fortune 500 companies are based there, and its Court of Chancery handles complex corporate legal disputes. This established legal framework makes it the champion for startups seeking venture capital. Investors know and trust the Delaware system.
That prestige is not cheap. While the initial filing fee is reasonable, Delaware charges every LLC a $300 flat annual franchise tax. This makes it much more expensive to run compared to Wyoming or New Mexico.
Here is a side by side comparison of how these three states compare on key metrics.
| Feature | Wyoming | Delaware | New Mexico |
|---|---|---|---|
| State Income Tax | 0% | 0% (for non-residents with no DE income) | 0% (for non-residents with no NM income) |
| Initial Filing Fee | ~$100 | ~$90 | ~$50 |
| Annual Report/Franchise Tax | ~$62 | $300 | $0 (No annual report required) |
| Owner Privacy | Excellent (Anonymous LLCs allowed) | Good (Details not easily public) | Excellent (Anonymous LLCs allowed) |
| Best For | E-commerce, freelancers, holding companies | Startups seeking U.S. investors/VC funding | Budget-conscious founders, holding companies |
New Mexico: The Simple and Affordable Option#
New Mexico has a standout feature: it requires no annual report and has a $0 annual fee. This makes it the ultimate "set it and forget it" state for founders who want minimal costs. It also offers excellent privacy, allowing for anonymous ownership like Wyoming.
The only real downside is its lower profile. New Mexico is legitimate but lacks the corporate prestige of Delaware or the asset protection reputation of Wyoming. Still, for anyone whose top priority is the lowest possible cost with the least paperwork, New Mexico is the clear winner.
Matching the Right State to Your Business Model#
There is no single "best state for an LLC." The right choice depends on your business model. What works for an e-commerce seller could be a costly error for a tech startup seeking venture capital.
Getting this right from the start saves future headaches, reduces unnecessary costs, and ensures your legal structure supports your long term goals. Let's break down the best picks for common business types run by non U.S. residents.
E-commerce Sellers and Digital Nomads#
If you run an e-commerce store on a platform like Amazon or Shopify, or if you are a freelancer, Wyoming is almost always the best recommendation. It offers a great mix of strong privacy, simple annual compliance, and minimal fees.
The $62 annual report fee is predictable and affordable, letting you focus on your business instead of state bureaucracy.
New Mexico is another strong option, especially if your top priority is minimizing costs. With $0 in annual fees and no yearly report, it is as simple as it gets. This approach is perfect for a digital nomad who just needs a U.S. entity with the least administrative work.
SaaS Startups Seeking U.S. Investors#
For a SaaS product or any tech startup planning to raise money from U.S. investors, the conversation begins and ends with Delaware. The $300 annual franchise tax is higher, but its legal framework is the gold standard in the investment world. U.S. venture capitalists and angel investors know and trust Delaware corporate law.
Choosing any state other than Delaware can be a red flag for serious U.S. investors. They might even require you to re-incorporate in Delaware before they invest, costing you time and money.
Delaware’s specialized Court of Chancery provides a predictable environment for handling business disputes, which gives investors confidence. That legal prestige makes the higher annual cost a necessary investment for any startup with growth ambitions.
Asset Protection and Holding Companies#
When your main goal is creating a holding company to manage assets like real estate, intellectual property, or stock portfolios, the focus shifts to asset protection.
Both Wyoming and Nevada are leaders in this area. They offer robust "charging order" protections. This is a legal shield that prevents a creditor from seizing the LLC's assets to cover a member's personal debt. Instead, the creditor can only get a lien on distributions paid out to that member, keeping the company and its assets safe.
What To Do After You Form Your LLC#
Registering your company is a big step, but the real work starts now. To keep your new U.S. business legal and running smoothly, you have a few critical tasks to complete right away. Handling these compliance steps correctly from day one prevents future problems.
First, get an Employer Identification Number (EIN) from the IRS. This is your business's nine digit federal tax ID. You cannot open a U.S. business bank account, file taxes, or hire anyone without it. It is like a Social Security Number for your company.
Critical Compliance for Non-U.S. Founders#
As a non-U.S. owner, you will also need an Individual Taxpayer Identification Number (ITIN). This number is essential for handling your personal U.S. tax filing obligations that come with owning a U.S. entity. Thankfully, specialized services can get you an ITIN without you having to mail your original passport, a major benefit for international founders.
Once you have your EIN, you can get a U.S. business bank account. Many modern fintechs and banks now let non-residents open accounts entirely online. This is a game-changer for managing U.S. revenue without visiting the country.
With those foundational pieces in place, your focus shifts to ongoing compliance. This boils down to two main responsibilities:
- Beneficial Ownership Information (BOI) Reporting: You must file a report with the Financial Crimes Enforcement Network (FinCEN) that discloses who owns and controls your company. It is a mandatory federal rule to increase transparency, and the penalties for not filing are severe.
- Annual Tax Filings: Every U.S. LLC must report to the IRS each year, even if you owe zero tax. Understanding what you need to file is crucial for keeping your company in good standing.
Managing these post formation steps is as important as picking the right state for your LLC. It keeps your business compliant and ready for growth.
Your Top Questions About Forming a US LLC, Answered#
Entering the U.S. business world for the first time brings up many questions. Let's get clear, direct answers to the most common questions from international founders.
Do I Really Need a US Address or Phone Number?#
No, you do not need a personal U.S. address or phone number to start. What you do need is a Registered Agent with a physical address in the state where you form your LLC.
This agent's address is your company's official point of contact for legal mail or state notices. Nearly all formation services, especially those for non-U.S. residents, include a Registered Agent in their packages. It is a simple way to meet the legal requirement without being in the state.
Can I Form an LLC in Wyoming but Run My Business From Another Country?#
Absolutely. This is one of the biggest benefits for entrepreneurs outside the U.S. You can set up your LLC in a place like Wyoming to take advantage of its strong privacy laws and low fees while operating your online business from anywhere in the world.
The key is to avoid creating a physical presence, known as "nexus," in any other U.S. state. As long as you do not have an office, employees, or inventory there, your main compliance duties remain with the state where you formed the LLC. This keeps things simple.
What’s the Difference Between an EIN and an ITIN?#
This is a very important distinction for your taxes. The EIN (Employer Identification Number) is a tax ID for your business, while the ITIN (Individual Taxpayer Identification Number) is a tax ID for you personally.
- EIN: Your LLC gets this number. You will need it for almost everything official: opening a U.S. bank account, hiring anyone, and filing your company's federal tax returns.
- ITIN: This is your personal tax ID. As a non-U.S. individual who must file U.S. taxes but cannot get a Social Security Number, you will likely need an ITIN to handle your personal tax reporting to the IRS.
Knowing the role of each is critical for staying compliant. Your EIN makes your business official to the IRS, and your ITIN connects you personally to your U.S. tax obligations. If you need help getting them, a service like Taxsym can make the process much smoother.