Best States For Forming an LLC in 2026
If you’re a U.S.-based entrepreneur who’s learned how to create an LLC and what documentation you need, you may have one more question: “Where do I go?” The state you form your LLC in doesn’t have to be the same one you operate your business out of, so there are a number of elements to consider when choosing a state. Is it best to start your business within the state you reside, or are there better options that carry tax benefits and legal advantages for founders?
An LLC, or limited liability company, is a type of business structure in the United States that provides limited liability protection, which means the owner’s personal assets are protected in the case of legal action or business-related debts. LLCs are subject to fees, franchise taxes, and self-employment taxes, which vary widely by U.S. state. The state where you form your LLC can affect cost, protection, and compliance burden.
In this guide, we’ll cover LLC fees and annual costs, the key factors to weigh when forming one, and a state-by-state breakdown of laws and regulations. We’ll also look at how Slash’s business banking platform can support new founders with flexible payment options, up to 2% cash back on card spend, and direct accounting integrations that simplify financial management.¹
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Best States to Form an LLC: Side-by-Side Snapshot
To begin, here’s a quick snapshot of some of the best states to consider. We’ll elaborate a bit more later, but if you’re looking for a quick answer, this chart has you covered:
Does the State You Form Your LLC In Really Matter?
Short answer: yes. To understand why, it’s best to look past generic advice about "business-friendly states" and do research into what actually drives the decision: where your business operates, what fee structures look like, what it costs to maintain year over year, and what level of asset protection you need. If that’s why you’re reading this article, you’re off to a good start.
Here are some quick differences that can be found between states:
- Fees and costs: Filing fees can be as high as $500 (Massachusetts), annual compliance costs can be as high as $800 (California), and income tax can be as high as 13.3% (also California).
- Privacy: Some states, like Wyoming, allow LLC founders to be completely anonymous. Other states require LLC information to be made publicly available; New York actually makes new LLCs publish a notice of formation in at least two newspapers.
- Asset protection: Some states may allow creditors to seize an owner’s assets or force sales to satisfy business debts, while others offer strong protections through Domestic Asset Protection Trusts (DAPTs). These states allow you to shield assets from creditors while retaining beneficial interest, often with statutes of limitations for fraudulent transfer claims.
Furthermore, some of these factors can vary case-to-case based on your business profile. This may all seem like a lot, so let’s break down some of the most important factors to keep in mind.
Key Things to Consider When Choosing Your LLC State
Here are five factors that can help determine which state works best for your situation and goals:
Whether Your Home State Makes the Most Sense
Generally speaking, your home state has an advantage when it comes to forming an LLC, especially if it’s where your business has a physical location. When forming an LLC outside your home state, you’ll have to register as a foreign LLC, which comes with a qualification process. This also means you’ll have to pay filing fees, annual costs, and registered agent requirements for both your home state and the one you created your LLC in. You’ll have to maintain annual compliance in both, which can be a headache if rules between them are different.
Even though working across two states carries extra regulations and costs, it can still make sense in some contexts. For a founder that operates in a state with high filing and annual fees, it may be worth it to form an LLC in a state with lower fees. To guard against debt collection, someone could choose a state with much stronger asset protection than their own.
Those who are open to moving have a lot more freedom to make this decision. If you’re not tied down to one location, you can choose any state based on your desires, budget, and business structure. If you’re a “digital nomad” who operates a business entirely online without living at a permanent U.S. address, you also have the ability to choose a state without doubling up on fees, as you don’t have a home state.
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What Fees, Annual Costs, and Registered Agents Look Like
While filing fees vary widely, ongoing costs often matter more in the long-term than the initial filing expense. For example, Washington charges $200 to file with a $70 annual report fee. California charges only $70 to file, but comes with an $800 annual franchise tax regardless of whether you made any profit. Over five years, that's a $3,650 difference.
Some yearly compliance requirements include annual reports, franchise taxes, and registered agent fees. A few states, including Arizona and Ohio, have no annual report requirement. Meanwhile, Massachusetts charges $500 annually just to file that report. Additionally, all states require LLCs to have registered agents, which are designated individuals or providers authorized to receive official legal, tax, and government documents on behalf of a business. If you aren’t acting as your own registered agent, then using a registered agent service comes with its own annual costs, typically between $50 and $150.
How LLC Taxes Actually Work
Here’s an important distinction to keep in mind: state income tax is owed where the business operates, not where the LLC was formed. You can form an LLC in a different state to avoid annual fees and poor asset protection, but you’ll still owe taxes in the state your business actually operates in.
With an LLC, you’ll be paying personal income tax rather than corporate income tax, even if your business has several owners. With pass-through taxation, your profits flow to your personal tax return. Single-member LLCs default to sole proprietorship taxation, while multi-member LLCs default to partnership taxation. In both cases, you report business income on your personal return and pay at your individual tax rate.
As your business scales, you may consider filing an S-corp election, which declares your business as a separate entity from your personal finances and passes earnings and losses down to all owners and investors.
How Much Privacy and Asset Protection You Need
Privacy, in the context of LLCs, means business ownership is kept completely off of public records and/or details aren’t fully shared with the IRS. If you’re an individual with a high net worth or local notoriety, you may prefer to keep your name off of your business activity. Extra privacy regulations can also make it difficult for frivolous lawsuits to be levied against you.
Asset protection can be a large priority for some founders. Entrepreneurs who are taking a financial risk with their LLC will often want their personal assets shielded from business liabilities. Some states, including Nevada, Wyoming, and South Dakota, have specific charging order protections that make it difficult for creditors to seize an owner’s assets to pay off business debts.
Whether You're Forming as a Non-US Resident
Non-US residents can form LLCs but face additional complexity. Along with standard formation documents, you'll also need an Individual Taxpayer Identification Number (ITIN) from the IRS to get an Employer Identification Number (EIN). Tax obligations also become more complicated for non-residents, as they’ll owe US taxes on income earned from the LLC and may face reporting requirements in their home country.
Traditionally, foreign founders who want access to a US bank account would need to form a U.S. entity and obtain an EIN. Slash changes that. Our Global USD Account provides an alternative to traditional US banking, enabling you to open a U.S. bank account without needing a U.S. registered corporation.³ Balances are backed by Slash’s USDSL stablecoin, which is pegged to the U.S. dollar in value one-to-one.
With the Slash Global USD account, business owners from other countries don’t have to form an LLC to operate within the United States. If they do later decide to form a US LLC and obtain an EIN, we also support fully incorporated businesses. Once you have your employer identification number and formation documents, you can apply to access the full Slash business banking platform.
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Slash goes above with better controls, better rewards, and better support for your business.
Where to Form an LLC in 2026: Top State Picks
The right state may come down to your business profile and long-term goals. What works for a VC-backed startup with high income is often quite different from what works for a sole proprietor that operates online.
Wyoming: Best for Privacy and Low Costs
Wyoming offers some of the strongest privacy and asset protections in the US. Member names aren't required in any public filing, making ownership completely anonymous if desired. It was also the very first state to establish the LLC, passing legislation in 1977. Wyoming works particularly well for online businesses and real estate investors setting up holding companies.
Costs: $100 to file, $60 annual report fee (or a fee of $.0002 per dollar of assets, which surpasses $60 at $300k of assets)
Key advantages: Strong asset and privacy protection laws, no franchise tax or income tax.
Caveats: If there’s one downside to Wyoming, it’s that it has the lowest population in the United States. Moving your storefront to Wyoming may only be a savvy business decision in certain well-travelled areas.
Delaware: Best for Startups Raising Capital
Over 65% of Fortune 500 companies have chosen Delaware as their legal home due to its flexible and advanced business laws. Delaware also has its own Court of Chancery, which is a specialized business court that provides predictable, sophisticated legal precedents. Because this court can give guidance on governance and transactional liability, Delaware has become a popular hub for corporate litigation.
Costs: $110 filing fee, $300 annual franchise tax
Key advantages: Well-established corporate law, no state corporate income tax on Delaware entities operating out of state, and a structure that allows for separate “series”, which are subunits protected from the liabilities of the others, under one LLC.
Caveats: Forming an LLC in Delaware won’t come with as many advantages as opening a corporation. Its moderately high fees may be a hurdle for small businesses.
Nevada: Best for Asset Protection
Nevada provides robust asset protection laws and strict privacy protections. It offers charging order protections that make it difficult for creditors to seize an owner’s assets in cases of owed debts. Nevada also doesn't require disclosure of LLC members, and has no information-sharing agreement with the IRS.
Costs: $425 filing fee, $350 annual fee
Key advantages: Asset protection laws, no income tax, and no franchise tax.
Caveats: An interesting wrinkle with Nevada is its reputation for misdeeds; the state’s companies rank the highest in fraudulent activity. This means banks and financial institutions sometimes scrutinize those who open an LLC in Nevada more carefully.
Florida: Best for International Founders
Florida offers a growing economy, reasonable fees, and relatively straightforward formation processes. One of the state’s distinctions is its easy access for foreign founders, as the City National Bank of Florida (CNB) offers specialized international banking services with Spanish support.
Costs: $125 filing fee, $138.75 annual report fee
Key advantages: No state income tax on personal earnings, easy foreign access, and Series LLC option allowing multiple separate "series" under one LLC umbrella, similar to Delaware.
Caveats: All businesses that buy, sell, rent, or lease property are subject to a 6% sales tax, even for foreign LLCs.
Texas: Best for Businesses with Physical Presence
Given Texas’ strong economy and business-friendly regulations. Texas works particularly well for LLC owners with physical operations, such as retail, manufacturing, or service businesses with local customers. The state's regulatory burden is also lower than other large states like California or New York, making ongoing compliance simpler without sacrificing access to a large market.
Costs: $300 filing fee, no annual report fee, franchise tax if revenue is above $2.47 million
Key advantages: No personal income tax, relatively low regulatory complexity, and strong infrastructure supporting business growth. Texas is one of a few states that don't require an annual report, but it does require a Public Information Report, which is similar (and free).
Caveats: While its limit is high, the franchise tax can be an obstacle for particularly successful mid-sized businesses and corporations.
New Mexico: Best for Founders on a Budget
New Mexico offers one of the lowest-cost LLC structures in the US. The $50 filing fee is minimal, and there's no annual report or yearly fee. Owner privacy is also strong in the state, as it’s the only place that doesn’t require founders to disclose their identity to the government to form an LLC. For budget-conscious entrepreneurs or those prioritizing simplicity, New Mexico delivers.
Costs: $50 filing fee, $0 annual fees
Key advantages: Low cost, no annual compliance burden, privacy laws
Caveats: While New Mexico offers low costs and strong privacy, their business services, economy, and infrastructure aren’t strong compared to some larger states.
Form Your LLC (or Don’t) and Open a Business Account with Slash
Whether you choose to operate across multiple states or stay within your own, you’ll need the right banking software to support your new LLC. The Slash business banking platform offers tools that can help founders streamline their operations alongside tracking capabilities that keep their finances transparent.
Slash doesn’t come with minimum balance requirements or per-transaction limits, meaning you won’t be stuck with constraints as you get your LLC up and running. We also offer the Slash Visa® Platinum Card, which comes with up to 2% cash back, putting valuable early-stage capital back into your pocket. As your company expands, you can create unlimited virtual cards for employees that need to make important business expenses.
Our built-in automation tools help make routine financial tasks like expense categorization and reconciliation a breeze, giving new founders extra time to focus on what matters. These features make Slash the right choice for LLCs that want to scale their operations without scaling their overhead.
We offer more features that can help small business owners streamline their workflows, including:
- Working capital financing: With our working capital, users can choose between flexible 30, 60, or 90 day repayment terms so LLCs can continue to scale while still supporting liquidity for daily operations.⁵
- Reimbursements: Instead of managing reimbursements across multiple tools, teams can now submit, review, and approve reimbursements directly inside the Slash dashboard.
- Global USD accounts: The Slash Global USD Account enables foreign business owners to send and receive USD around the world without a U.S. bank account or registered LLC.
Whether you're building a startup or scaling an established business, Slash provides the tools and flexibility LLC owners need to manage your finances efficiently on one integrated dashboard.
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Frequently asked questions
What is the best state for single member LLC formation?
The best state for single member LLCs is often your own home state, but New Mexico and Wyoming can be strong options due to low costs and good privacy. These are also ideal states for forming an LLC if you’re located outside of the U.S.
Where can I find a registered agent?
Registered agents can be found through commercial registered agent services or by appointing an eligible individual resident, such as a trusted employee, owner, or even yourself. Because of the varied costs of registered agents between services, it's tough to compare prices between multiple states, so they won't really be a factor when considering state options.
How to Form an LLC in the U.S. as a Non-Resident in 2026
What is pass through taxation?
Pass through taxation refers to a tax advantage where businesses don't pay taxes on the entity level. Instead, the income passes to the owners of the business - they pay personal income taxes for their share of the business.
The Complete Guide to LLC Expenses and Tax Deductions
Why is Delaware the best state to form a corporation, but not to form an LLC?
Delaware's Chancery Court and separate "series" structure offer more advantages to corporations than to small businesses. With fairly expensive annual fees and filing fees, it's not a perfect option for new LLCs.
Where do I pay state income tax if I open a foreign LLC?
Foreign LLCs pay state income tax in the state where their operations primarily reside. If you form an LLC somewhere without state income tax, but your storefront is in your home state, you'll pay your home state's taxes.
How to Start a Business in the USA: A Step-by-Step Guide for Foreigners
