Published October 1, 2026
Ask the internet where a nonresident should form an LLC and you will get two answers shouted with equal confidence: Delaware and Wyoming. Both answers are incomplete, and one of them is expensive. I have watched founders pay Delaware's $300 annual franchise tax for years on a side project earning nothing, because someone told them Delaware was "the" LLC state. It is the corporation state. For a small LLC, the math points elsewhere.
The actual cheapest: New Mexico
New Mexico charges a $50 filing fee and requires no annual report and no annual fee. Once you are formed, there is no recurring payment to the Secretary of State, ever. Over five years, the state-level cost of a New Mexico LLC is $50 total. Nothing else in the country touches that for a nonresident who will not operate physically in the formation state.
The catch, such as it is: you still need a registered agent with a physical New Mexico address, which runs roughly $50 to $150 a year from commercial services. That cost applies in every state, so it does not change the ranking, but it does change the "LLC for $50" fantasy into a realistic "$100 to $200 a year all-in" picture.
The practical favorite: Wyoming
Wyoming charges $100 to file and about $60 a year for the annual report. Five-year state cost: roughly $400. Founders pick Wyoming over New Mexico for three reasons: stronger asset protection statutes, better name recognition with US banks and payment processors, and a privacy setup that keeps member names off the public annual report. For a working business rather than a holding entity, many founders consider the extra $350 over five years well spent.
The expensive myth: Delaware
Delaware charges about $110 to file and a flat $300 franchise tax every year, regardless of revenue. Five-year state cost: about $1,610. Delaware earns that premium for venture-track startups: investors expect Delaware entities, the Court of Chancery is the gold standard for business disputes, and the case law is unmatched. If you are raising venture capital, form in Delaware and do not think twice. If you are a solo founder selling templates online, you are paying $300 a year for prestige you will never use.
The five-year comparison
State fees only, excluding registered agent costs that apply everywhere:
- New Mexico: $50 filing + $0 annual = $50 over five years
- Wyoming: $100 filing + $60 x 5 = $400 over five years
- Delaware: $110 filing + $300 x 5 = $1,610 over five years
- California (for comparison): $70 filing + $800 x 5 = $4,070 over five years
Cheap filing fees can mask expensive maintenance. Arkansas looks appealing at $45 to file, then charges a $150 franchise tax every year. Always price the whole ownership period, not the formation day.
The home-state trap
Here is the mistake that costs real money. If you live in California and form your LLC in Wyoming to "save" on fees, California still considers you to be doing business in California. You must register your Wyoming LLC as a foreign LLC in California, pay California's $800 annual franchise tax, and file in both states. You did not save $740 a year. You added Wyoming's fees on top of California's.
The rule is simple: if you live, work, hire, or hold inventory in a state, form there. The out-of-state LLC strategy only saves money when you genuinely operate nowhere in particular, which is exactly the nonresident and digital-nomad case.
What state choice does not change
For most nonresidents, the state does not change your federal tax bill. A single-member LLC is a pass-through by default, and your federal obligations (EIN, and for foreign-owned single-member LLCs the annual Form 5472 with a pro-forma 1120) are identical in every state. State choice changes your fees, your annual paperwork, and your privacy, not your federal taxes. Also note: none of Wyoming, New Mexico, or Delaware levies a personal income tax, which is part of why they dominate these lists.
Frequently asked questions
Do I have to visit the state where I form my LLC?
No. You never need to set foot in the state. You need a registered agent with a physical address there, which is exactly what the $50 to $150 a year buys you.
Is Wyoming or New Mexico better for privacy?
Both are strong. Wyoming does not list members on its public annual report, and New Mexico requires so little reporting that there is almost nothing public to list. Either beats states that publish member names.
What about Montana's $35 filing fee?
Montana is the cheapest filing fee in the country at $35, and its annual report fee is waived for 2026-27. It is a legitimate budget pick, though it lacks Wyoming's asset protection reputation and New Mexico's zero-maintenance simplicity.
Compare all 51 jurisdictions yourself.
LLC Cost by State shows every filing fee, annual report fee, and franchise tax with a 5-year total cost of ownership calculator.
Not legal advice: Entity choice has tax and liability consequences beyond fees. Fees change; verify current figures with the Secretary of State before filing, and consult an attorney or CPA for your situation.