Best State for Non-US Residents to Form an LLC
If you do not live in the United States, you can legally form an LLC in any of the 50 states. However, choosing the wrong state can result in thousands of dollars in unnecessary fees, complex state taxes, and public exposure of your identity.
For 90% of non-US residents running online businesses (e-commerce, SaaS, consulting), Wyoming is the best state. It costs $100 to form, $60 minimum per year to maintain, and offers complete owner privacy. If you plan to raise Venture Capital from US investors, choose Delaware instead.
Comparison Table: Top States for Foreigners
| Feature | Wyoming | Delaware | New Mexico |
|---|---|---|---|
| Formation Fee | $100 | $90 | $50 |
| Annual Fee | $60 minimum | $300 (Franchise Tax) | $0 |
| Owner Privacy | Excellent | Good | Excellent |
| State Income Tax | 0% | 0% (for out-of-state income) | 0% (for out-of-state income) |
| Best For... | E-commerce, SaaS, Freelancers | Startups seeking VC funding | Nomads on a strict budget |
Why These States Win
1. Wyoming: The Gold Standard for Foreigners
Wyoming essentially invented the LLC. It is explicitly designed to be affordable, private, and business-friendly.
- Privacy: Wyoming does not require the owners' (members') names to be listed on the public database. Only the Registered Agent's name is public.
- Official State Source: Verify fees at the Wyoming Secretary of State.
2. Delaware: The Corporate Capital
Delaware is famous for its advanced Court of Chancery, which handles only corporate disputes. Most Fortune 500 companies are incorporated here.
- The Catch: Delaware's $300 annual franchise tax is steep for a small online business.
- Official State Source: Verify the franchise tax at the Delaware Division of Corporations.
3. New Mexico: The Absolute Cheapest
New Mexico is a hidden gem for budget-conscious international founders because it is one of the only states with no annual reporting fee.
- The Catch: Some digital platforms (like Stripe or US banks) are less familiar with New Mexico LLCs compared to Wyoming or Delaware, though this is improving.
This entire strategy only works if you do not have a physical presence in the US. If you buy a warehouse in Texas to store physical products, or hire an employee in California, you establish "physical nexus." You will be required to register your Wyoming LLC as a "Foreign LLC" in Texas or California, paying fees in both states.
Warning: State Selection Does Not Solve Federal Taxes
Forming your LLC in a "tax-free" state like Wyoming means you pay $0 in state income tax. It does not exempt you from federal IRS rules.
A single-member LLC owned by a non-US resident is treated as a "disregarded entity" for tax purposes. However, the IRS specifically requires foreign-owned disregarded entities to file Form 5472 and a pro-forma Form 1120 every year. Failure to file carries a massive $25,000 penalty. Learn more about Form 5472 requirements here.