Best State for Company Registration in USA

There is no single best state for company registration in the USA. The best state depends on what the business does, where its customers and staff are, who owns it and whether you plan to raise money. What you can say is that a handful of states come up again and again, each for a different reason. This guide reviews them one by one so you can see which fits you. If you would rather pick by your own situation, read the companion guide on which state is good for company registration in the USA, and for the quick business-by-business tables see our page on the best state to form a business in the USA.

Key takeaways

• Delaware, Wyoming and New Mexico are the states most often chosen by non-resident owners of online businesses.
• Delaware is the usual choice for a startup that expects to raise money from investors.
• If you have an office, staff or a shop in a state, you generally have to register there anyway, so that state is often the best one.
• Compare the yearly cost of a state, not only the one-time formation fee.
• The state you form in does not change your federal tax. It changes the state fees, the yearly filings and the state tax.

What "best" should mean for you

People usually ask for the cheapest state or the most famous one. A better test has four parts:

1. Total cost over the first three years. That is the formation fee, the yearly report or tax, and a registered agent each year.
2. Paperwork. Some states ask for a report every year, some do not.
3. Where you really operate. A company that works from Texas but is formed in another state may have to register in Texas as well and pay both states.
4. Who will deal with the company. Investors, banks and marketplaces each have habits that favour certain states.

The popular states, one by one

Delaware

Best for: startups, founders who will raise money, and anyone who wants the best-known company law.

Delaware has a long record of business court decisions, which gives lawyers and investors a lot of certainty. Many venture investors expect a Delaware C-corporation. An LLC in Delaware pays a flat yearly tax (currently $300, due in June). Watch out for: the yearly cost is higher than in some states, and if you work from another state you may need to register there too.

Wyoming

Best for: low-cost LLCs, consultants, freelancers and online businesses.

Wyoming has no state income tax and a low, simple yearly filing (an annual report with a licence tax that has a small minimum). It is popular with non-resident owners who sell services or products online and have no staff in the US. Watch out for: it is less familiar to investors than Delaware.

New Mexico

Best for: the lowest paperwork for a simple LLC.

An LLC in New Mexico does not have to file an annual report, so there is nothing to file with the state each year apart from keeping the registered agent. Watch out for: New Mexico has a state income tax, and a company that is active in another state still has to deal with that state.

Florida

Best for: businesses with customers, staff or a presence in Florida.

Florida has no personal income tax, and an annual report is due each year between January 1 and May 1. It makes sense when the business actually works there. Watch out for: the report must not be missed, as late filing carries a penalty.

Texas

Best for: businesses that operate in Texas.

Texas has no personal income tax, but companies file a yearly franchise tax report, even where little or no tax is due. It is a natural choice for a business with a Texas office or staff. Watch out for: it is rarely the best choice for a company with no Texas link.

Nevada

Best for: businesses that operate in Nevada.

Nevada has no personal income tax, but it charges a state business licence and an annual list, so its yearly cost is higher than Wyoming's. Watch out for: it is often marketed as a low-tax state, yet the yearly fees add up.

California

Best for: businesses that operate in California.

California has a minimum yearly franchise tax for LLCs (currently $800) on top of the filing fees, and it applies to companies that do business in the state. It is the right place for a company with customers and staff in California, and often poor value for one that does little there. Watch out for: forming elsewhere does not avoid it if you actually operate in California.

The states side by side

Fees change, so check the current formation and yearly cost of every state on our LLC filing fees by state page.

What the state does not change

• Federal tax. A single-member LLC is usually taxed the same way in every state. A foreign-owned single-member LLC files Form 5472 with the IRS each year whichever state it is in. See the IRS page on Form 5472.
• The EIN. The IRS issues it the same way for every state. See EIN for your company.
• Your own country's tax. Where you live decides what you owe at home.
• Registering where you operate. A company with an office, staff or a shop in another state usually has to register there as a foreign company as well.

Mistakes to avoid when picking a state

• Choosing only on the one-time formation fee and ignoring the yearly cost.
• Forming in one state while operating in another, then paying fees in both.
• Believing a "tax-free" state means no tax at all. Federal tax and sales tax still apply.
• Forming in Delaware only because it is famous, when a low-cost LLC would do.
• Skipping the registered agent. Every state needs one with a street address in the state. See our registered agent service.

Frequently asked questions

Which is the cheapest state to register a company in the USA?

The formation fee varies by state, and the yearly cost matters more over time. Wyoming and New Mexico are commonly chosen for low cost, but compare the current figures on the state fees page.

Is Delaware the best state for an LLC?

It is the best known, and the right choice for many startups. For a small online business with no investors, a lower-cost state is often enough.

Can I form a company in a state I do not live in?

Yes. You can form in any state. A non-resident owner does not need to live in the US or in that state. See LLC formation for non-residents.

Should I choose an LLC or a C-corporation?

An LLC suits most small businesses and online sellers. A C-corporation suits a founder who plans to raise investor money. See LLC vs C-Corp.

Can I change the state later?

You can, but it means a new registration or a formal move of the company, with fees and paperwork. It is easier to choose well at the start.

Ready to register?

Tell us what the business does and where you will work from, and we will help you pick the state and form the company, with the registered agent and EIN: see the best state for your business. This is general information, not legal, tax or financial advice.