"Which state should I form my LLC in?" is one of the first — and most overthought — questions founders ask. The honest answer for most people is boring: your home state. But Wyoming, Delaware, and New Mexico each have genuine advantages worth understanding. Here is the complete 2026 breakdown.
The default rule: file where you live
If you operate your business from one state — your office, your home, your storefront is there — forming in that state is almost always cheapest and simplest. Here is why: if you form in Wyoming but operate in Texas, Texas requires you to register as a "foreign LLC," which means two sets of fees, two annual reports, and two registered agents. The "cheap" Wyoming LLC suddenly costs more than just filing in Texas.
File in your home state if: you have a physical presence, employees, or a storefront there; you are a freelancer working from home; you want the simplest compliance.
When another state makes sense
Consider forming out of state if:
- You run a fully online business with no physical footprint.
- Privacy matters deeply to you (some states hide owner names).
- You plan to raise venture capital (Delaware).
- You want the lowest possible lifetime cost (New Mexico, Wyoming).
The big three compared
| Factor | Wyoming | Delaware | New Mexico |
|---|---|---|---|
| Filing fee (2026) | $100 | $110 | $50 |
| Annual report / fee | $60 annual report | $300 annual tax | $0 — no annual report |
| State income tax | None | None (but $300 annual tax applies) | None on LLC pass-through* |
| Owner privacy | Excellent — members not listed | Good — members not listed | Excellent — minimal disclosure |
| Processing speed | 1–3 business days | 1–3 business days | 1–2 weeks |
| Business court system | Good | Best in the US (Court of Chancery) | Basic |
| Best for | Online businesses, privacy, low cost | Startups raising VC | Absolute lowest cost |
*New Mexico has no annual report requirement at all — a unique advantage that compounds every year.
Wyoming: the all-rounder
Wyoming invented the LLC back in 1977, and it shows. The state combines:
- Low, predictable costs: $100 to file, $60/year after.
- Real privacy: member and manager names are not on public record.
- No state income tax and strong asset-protection laws (charging order protection).
- Fast processing — often 1–3 business days.
Wyoming is the most popular choice for online businesses, holding companies, and founders who want privacy without Delaware's $300 annual tax. It is our most recommended out-of-state option for typical small businesses.
Delaware: the startup state
Delaware dominates one specific lane: companies that will raise venture capital. Investors, lawyers, and acquirers all know Delaware law, and the Court of Chancery — a dedicated business court with centuries of case law — gives everyone predictability.
The catch: $300 every year in franchise tax, on top of the $110 filing fee. For a small business that will never raise funding, that is $300/year for prestige you will never use. Delaware makes sense for venture-scale startups; for everyone else, Wyoming or your home state wins on value.
New Mexico: the budget champion
New Mexico is the quiet bargain of the LLC world:
- $50 filing fee — among the lowest in the country.
- No annual report, ever. This is the killer feature: most states charge $50–$300 every single year just to keep your LLC active. New Mexico charges nothing.
- Decent privacy with minimal public disclosure.
The trade-off is slower processing (1–2 weeks is common) and a less developed business-law ecosystem. But on pure lifetime cost, nothing beats New Mexico: over 10 years, you save roughly $600 vs. Wyoming and $3,000+ vs. Delaware in state fees alone.
What about Nevada, Florida, Texas?
- Nevada markets itself as business-friendly, but fees have crept up ($425+ for the full filing package with required licenses) — Wyoming gives you the same benefits cheaper.
- Florida ($125 filing) and Texas ($300 filing) are fine if you live there, but neither is worth forming in from out of state.
- California charges $70 to file but hits you with a minimum $800/year franchise tax — the most expensive state to maintain an LLC by far.
2026 filing fee quick table
| State | Filing fee | Annual cost |
|---|---|---|
| New Mexico | $50 | $0 |
| Wyoming | $100 | $60 |
| Delaware | $110 | $300 |
| Colorado | $50 | $10 |
| Texas | $300 | $0 |
| Florida | $125 | $138.75 |
| New York | $200 | $9 biennial (+ publication $300–$1,200 in some counties) |
| California | $70 | $800 minimum franchise tax |
| Nevada | $75 + $200 license | $350+ |
Fees change; always verify with the Secretary of State before filing.
The bottom line
- Live and work in one state? File there. Done.
- Online business, want privacy + value? Wyoming.
- Raising venture capital? Delaware.
- Want the cheapest LLC on earth? New Mexico.
Whichever you choose, the filing process itself is the same — our step-by-step formation guide walks through it, and our fee-by-state table has the full 50-state picture.