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I've formed LLCs in three different states over the past three years. The state you choose impacts your costs for the entire life of your business, not just formation.
My first LLC in Delaware cost me $600 extra over two years compared to Wyoming; with zero benefit.
This comparison shows you exactly what each state costs, how long formation takes, and which states are actually worth considering in 2025.
🥇 New Mexico ($50 filing, $0 annual fees)
🥈 Arizona ($50 filing, $0 annual fees)
🥉 Kentucky ($40 filing, $54/year ongoing)
🥇 Wyoming ($100 filing, $60/year, strong privacy)
🥈 Florida ($125 filing, $138.75/year, recognizable)
🥉 New Mexico ($50 filing, $0/year, but slower processing)
🥇 Wyoming (simple, cheap, international-friendly)
🥈 New Mexico (cheapest ongoing costs)
🥉 Delaware (only if raising VC money)
🥇 Wyoming 🥈 New Mexico 🥉 Nevada (but expensive)
Avoid Unless Required:
❌ California ($800/year minimum tax)
❌ New York ($1,000-$2,000 publication requirement)
❌ Massachusetts ($500 minimum annual tax)
State
Filing Fee
Annual Cost
Processing Time
5-Year Total
Best For
New Mexico
$50
$0 + agent ($39)
10-15 days
$245
Absolute minimum cost
Kentucky
$40
$15 + agent ($39)
7-10 days
$256
Budget startups
Arizona
$50
$0 + agent ($39)
5-7 days
$245
Fast + cheap
Wyoming
$100
$60 + agent ($39)
5-7 days
$535
Best overall value
Missouri
$50
$0 + agent ($39)
5-7 days
$245
Midwest businesses
Mississippi
$50
$0 + agent ($39)
10-14 days
$245
Southern region
Montana
$70
$20 + agent ($39)
7-10 days
$306
Privacy + low cost
Colorado
$50
$10 + agent ($39)
3-5 days
$285
Tech startups
Ohio
$99
$0 + agent ($39)
7-10 days
$255
Midwest presence
Florida
$125
$138.75 + agent ($100)
5-7 days
$1,080
Recognizable state name
State
Filing Fee
Annual Cost
Why It's Expensive
5-Year Total
California
$70
$800 franchise tax + $20 report + agent
$800/year minimum tax regardless of revenue
$4,750
New York
$200
$1,000-$2,000 publication + $9 report + agent
Mandatory newspaper publication
$2,092+
Nevada
$425
$350 + agent
Marketing hype, high fees
$2,214
Delaware
$90
$300 franchise tax + $50 report + agent
Good for VC, expensive for small biz
$2,246
Massachusetts
$500
$500 minimum + agent
High minimum excise tax
$3,200
Tennessee
$300
$300 + agent
High annual franchise tax
$2,000
Filing Fee: $100
Annual Report: $60
Franchise Tax: $0 Processing Time: 5-7 business days
Privacy: Excellent (no member names public)
Why I Recommend It:
Wyoming designed its LLC laws specifically to attract business formation. They want your business, so they make it easy and affordable.
Pros:
✓ Zero franchise tax (saves $300-$800/year vs other states)
✓ Strong privacy protections
✓ Simple annual compliance (one report)
✓ Predictable costs (no surprises)
✓ International-founder friendly
Cons:
✗ Not as recognizable as Delaware or California
✗ $60 annual report (vs $0 in New Mexico)
Best For:
Online businesses
Consultants and freelancers
E-commerce stores
Non-US residents
Anyone wanting low costs + strong legal protections
5-Year Cost: $535 (vs $2,246 for Delaware) Savings: $1,711 over 5 years
Filing Fee: $50 (lowest in US)
Annual Report: Not required
Franchise Tax: $0
Processing Time: 10-15 business days
Privacy: Excellent
Why It's Interesting:
New Mexico is the only state with no annual report requirement AND no franchise tax. After formation, your only cost is registered agent ($39/year).
Pros:
✓ Lowest filing fee ($50)
✓ Zero ongoing state fees
✓ No annual reports to file
✓ Strong privacy protections
✓ Simple compliance
Cons:
✗ Slower processing (10-15 days vs 5-7 for Wyoming)
✗ Less well-known than Wyoming
✗ Fewer business-friendly court precedents
Best For:
Bootstrapped founders watching every dollar
Side projects and experiments
Anyone wanting absolute minimum costs
Patient founders (slower processing okay)
5-Year Cost: $245 (cheapest in the US)
Filing Fee: $90
Annual Franchise Tax: $300
Annual Report: $50
Processing Time: 7-10 business days
Privacy: Moderate
The Delaware Myth:
"Everyone forms in Delaware" is only partially true. Delaware is optimal for C-Corporations raising venture capital. For LLCs, especially small business LLCs, it's just expensive.
When Delaware Makes Sense:
✓ You're raising institutional investment
✓ Investors specifically require Delaware entity
✓ You plan to go public eventually
✓ You have complex multi-state operations
When It Doesn't:
✗ You're a solopreneur or small team
✗ You're running an online business
✗ You're not raising VC money
✗ You think it just "sounds professional"
Pros:
✓ Well-established business law
✓ Court of Chancery (specialized business court)
✓ Investor familiarity
✓ Predictable legal precedents
Cons:
✗ $300/year franchise tax (vs $0 in Wyoming)
✗ $50 annual report fee
✗ No real benefit for small LLCs
✗ More expensive than alternatives
Best For:
VC-backed startups
Companies planning to raise institutional money
Businesses with investor requirements
5-Year Cost: $2,246 vs Wyoming: Costs $1,711 more over 5 years
Filing Fee: $125
Annual Report: $138.75
Franchise Tax: $0
Processing Time: 5-7 business days
Privacy: Moderate
Why People Choose Florida:
It's a recognized state name with reasonable costs. Not the cheapest, but not expensive either.
Pros:
✓ No franchise tax
✓ Recognizable state (vs Wyoming/New Mexico)
✓ Simple compliance
✓ Fast processing
✓ Growing tech scene
Cons:
✗ Higher annual fees than Wyoming ($138.75 vs $60)
✗ Members' names are public record
✗ Not the lowest cost option
Best For:
E-commerce businesses wanting recognizable state
Companies serving Florida residents
Businesses wanting US presence without "obvious" formation states
5-Year Cost: $1,080 vs Wyoming: Costs $545 more over 5 years
Filing Fee: $70 Annual Franchise Tax: $800 (minimum, regardless of revenue) Statement of Information: $20 every 2 years Processing Time: 10-15 business days
The California Tax Trap:
California's $800 minimum franchise tax is due by April 15th of your LLC's first year. If you form in December, you owe $800 by April.
Make $0 revenue? Still owe $800. Business failed? Still owe $800. Just testing an idea? Still owe $800.
When You Must Form Here:
You're physically operating in California
You have California employees
You have a California office/storefront
You're required by California regulations
When You Shouldn't:
You're running an online business from California (form in Wyoming, register as foreign LLC only if needed)
You're a non-resident thinking California sounds good
You want to save money
5-Year Cost: $4,750 vs Wyoming: Costs $4,215 more over 5 years
That's $4,215 you could invest in literally anything else.
Filing Fee: $200 Publication Requirement: $1,000-$2,000 (mandatory) Biennial Report: $9 Processing Time: 5-7 days (plus 6 weeks publication)
The Publication Trap:
New York requires you to publish your LLC formation in two newspapers (one daily, one weekly) for six consecutive weeks. Then file an affidavit of publication.
Costs by county:
NYC: $1,500-$2,000
Long Island: $1,200-$1,500
Upstate: $500-$1,000
If you don't comply within 120 days, your LLC is suspended. It can't legally operate until you publish and file the affidavit.
This is a 19th-century law that exists to funnel money to local newspapers. It serves no modern purpose.
When You Must Form Here:
You're physically operating in New York
You have NY employees or office
When You Shouldn't:
Literally any other scenario
5-Year Cost: $2,092+ (with publication) vs Wyoming: Costs $1,557+ more over 5 years
Best Choice: Wyoming or New Mexico
No need for physical state presence
Lowest ongoing costs
Simple compliance
Strong privacy
Avoid: California, New York, Delaware (unless raising VC)
Best Choice: Wyoming or Florida
Wyoming if cost-focused
Florida if you want recognizable state name
Both have simple tax structures
Avoid: States with high franchise taxes
Best Choice: New Mexico or Wyoming
Minimum costs matter when bootstrapping
Simple compliance when you're busy with client work
Privacy protections helpful
Avoid: Any state with annual minimums over $100
Best Choice: Wyoming
Most international-founder friendly
Simple compliance from abroad
Predictable costs
Strong privacy (don't need to disclose members)
Alternative: New Mexico (if you want absolute minimum cost)
Avoid:
California (high costs)
Delaware (unless raising VC)
States requiring in-person actions
Best Choice: Delaware
Investors expect it
Well-established corporate law
Easy future conversions to C-Corp
Alternative: Form in Wyoming now, reincorporate in Delaware when you raise (saves money in early stages)
Note: Check with your investors first. Some have specific entity requirements.
Fastest States (3-5 business days):
Colorado: 3-5 days
Arizona: 5-7 days
Wyoming: 5-7 days
Florida: 5-7 days
Delaware: 7-10 days (can expedite for +$100)
Average Speed (7-10 days):
Most states fall here
Standard processing without expediting
Slower States (10-15+ days):
New Mexico: 10-15 days
California: 10-15 days
Some East Coast states: 15-20 days
Pro Tip: Most states offer expedited processing for $50-$200 extra. Only pay for this if you genuinely need your LLC formed faster. The extra speed rarely matters since you still need to wait for your EIN.
Best Privacy States:
Wyoming:
Member names not required in public filings
Strong privacy statute protecting owner info
Minimal disclosure requirements
New Mexico:
No member names in formation documents
No annual reports (less public info over time)
Strong privacy protections
Nevada:
Good privacy laws
But expensive (not worth the cost for privacy alone)
Worst Privacy States:
Florida:
Member names public record
Annual reports include member information
Delaware:
Some member information public
More disclosure than Wyoming/New Mexico
Most Other States:
Moderate privacy (some info public, some private)
Why Privacy Matters:
If you don't want your name easily searchable as an LLC owner, choose Wyoming or New Mexico. This is especially important for:
Public figures
Anyone concerned about frivolous lawsuits
Privacy-conscious founders
These states have no state income tax on LLCs:
Alaska
Florida
Nevada
New Hampshire (but has interest/dividends tax)
South Dakota
Tennessee (eliminated state income tax in 2021)
Texas
Washington
Wyoming
Note: Even if your LLC state has no income tax, you still owe federal taxes and taxes in your home country (if non-US resident).
New Mexico: $245
Arizona: $245
Mississippi: $245
Missouri: $245
Kentucky: $256
Colorado: $285
Montana: $306
Wyoming: $535
Florida: $1,080
Various mid-tier states
Delaware: $2,246
New York: $2,092+
Nevada: $2,214
California: $4,750
Massachusetts: $3,200
Tennessee: $2,000
Here's what you'll actually spend over 5 years including registered agent:
State
Year 1
Year 2
Year 3
Year 4
Year 5
5-Year Total
New Mexico
$89
$39
$39
$39
$39
$245
Wyoming
$139
$99
$99
$99
$99
$535
Florida
$264
$239
$239
$239
$239
$1,220
Delaware
$290
$489
$489
$489
$489
$2,246
California
$1,070
$920
$920
$920
$920
$4,750
The Math: Choosing California over New Mexico costs you $4,505 extra over 5 years.
That's $4,505 that could go toward:
Marketing and customer acquisition
Product development
Hiring help
Your salary
Literally anything more useful than state fees
Start here:
Yes → Form in that state Even if expensive, you'll likely need to register there anyway. Might as well save the foreign LLC registration hassle.
No → Continue to Question 2
Yes → Form in Delaware Most investors expect Delaware entities. The extra $400/year is worth not fighting investors over entity structure.
No → Continue to Question 3
Absolute minimum cost: → New Mexico ($245 over 5 years)
Low cost + good reputation: → Wyoming ($535 over 5 years)
Privacy protection: → Wyoming or New Mexico
Recognizable state name: → Florida ($1,220 over 5 years)
Fast processing: → Colorado or Arizona
Yes → Wyoming is your best bet
International-founder friendly
Simple compliance from abroad
Predictable costs
Strong privacy
Alternative: New Mexico (if absolute minimum cost matters)
Reality: Everyone doesn't. Small businesses and online companies usually form in Wyoming, Florida, or their home state.
Delaware is optimal for VC-backed C-Corps. For small LLCs, it's just expensive.
I made this mistake. Cost me $600 extra over two years with zero benefit.
Reality: Unless you're physically operating there, you're paying $800-$2,000/year for nothing.
My friend formed in California because he had one client there. After paying $1,600 over two years ($800 x 2), he dissolved it and reformed in Wyoming.
Total waste of $1,600.
Reality: Nevada markets itself as "tax-friendly" like Wyoming, but costs 5-10x more.
Nevada: $814 Year 1, then $489/year = $2,214 over 5 years Wyoming: $139 Year 1, then $99/year = $535 over 5 years
Nevada charges $1,679 MORE with no additional benefit.
Reality: The filing fee is the smallest part of your total cost.
People see "Delaware - $90 filing" and think it's cheap. Then Year 2 hits with $300 franchise tax + $50 report + $199 agent renewal.
Suddenly your "cheap" $90 filing costs $549/year ongoing.
Reality: If you're running an online business with no physical location, you don't need to form in your expensive home state.
I live in [State with high costs]. I could form here for $500/year. Or form in Wyoming for $99/year.
Same legal protections. $401/year savings. I choose Wyoming every time.
Here's my framework after forming three LLCs:
Step 1: Rule out the expensive states
Unless physically required, never form in:
California ($800/year minimum)
New York ($1,000+ publication)
Massachusetts ($500/year minimum)
Nevada (expensive, no benefit)
Step 2: Determine if you need Delaware
Only if:
Raising venture capital
Investors specifically require it
Planning to IPO eventually
Otherwise, skip Delaware.
Step 3: Choose based on priorities
If cost matters most: New Mexico ($50 filing, $0 annual) If you want balance: Wyoming ($100 filing, $60 annual) If you want recognizable name: Florida ($125 filing, $138.75 annual)
Step 4: Confirm with the calculator
See your exact costs and compare options: LLCtoolkitPro.com/startup-cost-calculator
For 80% of founders: Form in Wyoming. It's the Goldilocks option; not the absolute cheapest, but great value with strong legal protections and good reputation.
For bootstrap/side project founders: Form in New Mexico. Save every dollar in the early stages. $245 over 5 years is unbeatable.
For VC-backed founders: Form in Delaware. Your investors will appreciate it, and the extra cost is negligible compared to your funding.
For physical businesses: Form in your operating state. You'll need to register there anyway, so save the complexity.
I built a tool that compares all 50 states side-by-side and calculates your exact costs.
It shows:
✓ Filing fees for every state
✓ Annual costs and franchise taxes
✓ 5-year total projections
✓ Processing times
✓ Privacy protections
✓ Best states for your business type
Plus get:
✓ Formation document generator
✓ State-specific filing instructions
✓ Banking setup guides
✓ Operating agreement templates
✓ Step-by-step checklists
Start here: LLCtoolkitPro.com