Ask which state is best for a non-resident LLC and you will get three confident answers: Wyoming for privacy, Delaware for credibility, New Mexico for cost. All three are partly right and all three miss the more important question, which is whether the state matters at all for what you are actually doing.
For a founder outside the United States selling software, services or products online, the state of formation is largely an administrative choice. It sets your filing fees, your annual paperwork, and how much of your name appears on a public register. It does not change your federal tax position, and it does not determine whether Stripe or Mercury will work with you.
This guide compares the three states properly, sets out the real five-year cost of each, and explains the one situation where choosing the wrong state creates genuine expense.
The short answer
- Wyoming suits most non-resident founders: low fees, no state income tax, strong privacy, and universally accepted by banks and payment processors.
- New Mexico is the cheapest over time because it has no annual report at all, at the cost of a slightly less familiar name.
- Delaware is the right answer only if you are raising venture capital or issuing shares to investors, and it carries a $300 annual franchise tax.
- If you have people, premises or inventory in a specific US state, form there. That single fact overrides everything else in this article.
The question that actually matters
US company law lets you form in any state regardless of where you live. But a state can also require you to register as a “foreign” entity if you are doing business within its borders — foreign here meaning out-of-state, not overseas.
That registration is called foreign qualification, and it is where people lose money. If you form in Wyoming for the low fees but you have an employee in California, warehouse stock in Texas, or rent an office in Florida, you are doing business in that state too. You end up paying twice: Wyoming’s fees plus the other state’s registration, annual report and possibly income tax.
What generally does not create that obligation, for a founder working from abroad: having customers in a state, holding a US bank account, using a payment processor, or using a registered agent’s address. Selling to Californians from Karachi does not make you a California business.
So the decision tree is short. Do you have physical presence, staff or inventory in a particular state? Form there. If not, the comparison below applies.
Wyoming
Wyoming has become the default for non-resident founders, and the reasons are practical rather than romantic. Formation costs around $100. The annual report costs roughly $60 for a small company with minimal in-state assets, and is calculated on assets located in Wyoming — which for an online business is usually nil, keeping you at the minimum.
There is no state income tax and no franchise tax. Members and managers are not listed on the public filing, so your name does not appear on a searchable state register. And because so many non-resident businesses use it, Wyoming LLCs are thoroughly familiar to banks, Stripe, PayPal and Mercury — which matters more than founders expect.
The drawbacks are minor: an annual report to remember, and no particular prestige if you are pitching institutional investors.
New Mexico
New Mexico is the cheapest option over any meaningful time horizon, for one reason: it has no annual report and no annual state filing fee for LLCs. You pay roughly $50 to form the company and, from the state’s perspective, nothing further.
It also offers strong privacy, with no requirement to publish member names. For a dormant holding structure, a side project, or a founder minimising fixed costs, it is difficult to beat.
Two caveats. New Mexico does levy state income tax on New Mexico-sourced income, which is irrelevant for most overseas founders but not for everyone. And because it is less common, you may occasionally meet a bank officer or platform reviewer less familiar with it. That is friction, not a barrier.
Note too that “no annual report” does not mean no obligations. Your federal filings, your registered agent and your Form 5472 duty are unaffected.
Delaware
Delaware’s reputation is real but frequently misapplied. Its advantages — the Court of Chancery, a deep body of corporate case law, and documentation every US investor recognises — matter enormously when you are negotiating a priced funding round or a share option scheme. They matter very little when you are invoicing consulting clients.
Formation costs around $110, and every Delaware LLC pays a flat $300 annual franchise tax whether or not it trades. Over five years that is $1,500 in tax alone, against roughly $300 in Wyoming and nothing in New Mexico.
Note also that venture investors generally want a Delaware C-corporation, not an LLC. If you are forming in Delaware because you intend to raise, check you are forming the right entity type — an LLC may need converting later, which costs more than starting correctly.
Cost comparison
| Wyoming | New Mexico | Delaware | |
|---|---|---|---|
| Formation fee | ~$100 | ~$50 | ~$110 |
| Annual report | ~$60 | None | None for LLCs |
| Franchise tax | None | None | $300 per year |
| State income tax | None | On NM-source income only | On DE-source income only |
| Members on public record | No | No | No |
| Familiarity with banks | Very high | Moderate | Very high |
| Five-year state cost | Approximate total |
|---|---|
| New Mexico | ~$50 |
| Wyoming | ~$340 |
| Delaware | ~$1,610 |
These are state fees only. Add a registered agent in every case, typically $50 to $150 a year, and your federal filing costs, which are identical whichever state you pick. Fees change — check current figures for your entity type against our state filing fee tables before deciding.
What your choice of state does not change
This is the part most comparison articles skip, and it is the part that determines your actual annual workload.
- Federal tax treatment is identical. A single-member LLC is a disregarded entity in all fifty states. Nothing about Wyoming makes income untaxed.
- Form 5472 applies everywhere. Foreign-owned single-member LLCs file it regardless of state, with a $25,000 penalty for failure.
- The EIN process is the same. Same form, same fax number, same waiting time.
- Sales tax follows your customers, not your formation state. Nexus is triggered by where you sell.
- Banking requirements are the same. Formation documents, EIN, ownership evidence and identification, whichever state issued the certificate.
If someone recommends a state on the basis that it removes federal filing obligations or US tax, treat everything else they tell you with caution.
Banking and payment processors
The practical question founders should ask is not which state is most prestigious but which will not slow down an account opening. Wyoming and Delaware are seen constantly by US fintech onboarding teams. New Mexico appears less often, which occasionally means an extra question rather than a refusal.
What actually determines the outcome is the quality of your documentation: a clean certificate of formation, an EIN confirmation letter, an operating agreement naming the owners, and identification that matches. Get those right and the state on the certificate is rarely the sticking point.
Choosing, by situation
| Your situation | Sensible choice |
|---|---|
| Freelancer or agency abroad, US clients | Wyoming |
| Ecommerce seller, no US staff or warehouse | Wyoming |
| Minimising lifetime cost, low activity | New Mexico |
| Holding company or dormant structure | New Mexico |
| Raising venture capital | Delaware, as a C-corporation |
| Staff, office or inventory in one US state | That state |
| Using a US fulfilment warehouse | Take advice — inventory can create nexus |
What you actually pay in a full year
State fees are the smallest part of running a US company, which is why optimising them too hard is a poor use of attention. Here is a realistic first-year budget for a single-member Wyoming LLC owned from abroad, excluding whatever you spend on your actual business.
| Item | Typical cost | Frequency |
|---|---|---|
| State formation fee | ~$100 | Once |
| Registered agent | $50 to $150 | Annual |
| US mailing address | $100 to $300 | Annual, optional |
| EIN application | Free from the IRS | Once |
| State annual report | ~$60 | Annual |
| Form 5472 and pro forma 1120 | Free to file, cost is preparation | Annual |
| Bookkeeping | Varies | Ongoing |
Two observations. First, the difference between the cheapest and most expensive state on this list is smaller than one month of most founders’ software subscriptions. Second, the items that carry real risk — the federal filing and the registered agent — cost the same everywhere.
The EIN itself is free. Anyone charging you a large fee purely to obtain one is charging for convenience and for knowing which boxes to complete, not for a government cost.
Three founders, three answers
The agency owner in Lahore
Hira runs a six-person design studio serving US clients who increasingly ask to contract with a US entity. She has no US staff and no inventory. Her priorities are a company her clients recognise, a US bank account, and low maintenance.
Answer: Wyoming. Low annual cost, no state income tax, and a formation state her clients’ finance teams see every week. New Mexico would save around $60 a year, which is not worth the occasional extra question during bank onboarding when her cash flow depends on getting paid quickly.
The developer testing an idea
Omar wants a US entity to accept Stripe payments for a side project that may earn nothing. He wants the lowest possible fixed cost and is comfortable answering an extra question if one arises.
Answer: New Mexico. No annual report means that if the project stalls, the company costs him only his registered agent. He still files Form 5472 each year — a point worth understanding before assuming a dormant company is free.
The startup raising a seed round
Two co-founders in Dubai have a US accelerator interested and expect to issue equity to investors and early employees.
Answer: Delaware, as a C-corporation. Not an LLC. The $300 franchise tax is irrelevant next to the cost of restructuring mid-round, and investors will expect documentation they already understand. Forming a Wyoming LLC first and converting later is a common and avoidable expense.
Year two and beyond
Most founders think hard about formation and then stop thinking, which is when companies quietly fall out of good standing. The recurring rhythm is short but unforgiving.
Your registered agent renews annually, and letting it lapse is the most common cause of a company losing good standing — the state loses its official point of contact and stops treating you as compliant. Your annual report, where the state requires one, follows its own date, usually tied to your formation anniversary. Your federal filing falls on 15 April. And if your ownership, address or management changes, the state and your bank both need telling.
None of this is difficult. It fails because it is spread across three different calendars maintained by three different parties, none of whom will chase you effectively at an overseas address.
If you need to change state later
It is possible, and it is more disruptive than it sounds. There are two routes.
Domestication moves the existing company to a new state, keeping its history and often its EIN, where both states permit it. It is the cleaner option but not available in every pairing.
Forming afresh and dissolving the old company always works but means a new entity, usually a new EIN, new bank account, and re-papering every client contract, payment processor and subscription in the company’s name.
Either way you will file a final Form 5472 for the closing entity, because dissolution is itself a reportable transaction. Budget for disruption to banking above all — reopening accounts is consistently the slowest part.
Myths worth discarding
“A Wyoming LLC is tax-free.” Wyoming levies no state income tax. Federal tax still applies to income effectively connected with a US trade or business, and your home country will have its own view of your profits.
“Delaware makes you look more serious.” To a venture investor, sometimes. To a client paying an invoice, never — they will not look up your state of formation.
“Forming in a privacy state hides ownership completely.” It keeps your name off a public state register. Your bank, your payment processor and the IRS all still know exactly who owns the company.
“You can switch states easily if you change your mind.” You can, by domestication or by forming afresh, but it means new formation documents, often a new EIN discussion with your bank, and updates to every contract and platform. Choosing sensibly at the start is cheaper.
Nevada, and the other states you will be steered towards
Three states missing from the comparison above are worth explaining, because they are recommended often enough that leaving them out looks like an oversight.
Nevada is the one that comes up most. It markets itself on no state income tax and strong privacy, and the first half of that is true. The cost is the problem. On top of the formation fee, Nevada requires an annual state business licence and an annual list of managers or managing members, and the two together run to several hundred dollars a year — several times Wyoming’s annual report for an identical outcome.
The privacy claim is also weaker than the marketing suggests, because that annual list names the managers or managing members and it is a public filing. Wyoming and New Mexico keep more off the register for a fraction of the price.
Florida is inexpensive and quick, and its annual report is modest. It publishes managers and members, so it is not a privacy state, and there is no advantage to a founder with no Florida connection.
Texas charges nothing for the annual report itself but requires a franchise tax report every year even when no tax is due, along with a public information report. It is a reasonable home state and an odd choice for someone who has never been there.
The pattern across all three is the same. None of them is a bad state. None of them does anything for a non-resident that Wyoming or New Mexico does not do more cheaply, and each adds a filing you would otherwise not have. When a formation service recommends one, it is worth asking what specifically it improves for your situation.
The one situation where the answer is not Wyoming
Everything above assumes what is true for most readers: the company has no physical footprint in the United States. Your customers are there, your money is there, but nothing tangible is.
Change that and the calculation inverts. If your business will have an office, an employee, or inventory sitting in a warehouse in a particular state, that state will expect you to be registered there as an out-of-state entity — and that registration brings its own annual report, its own registered agent and its own fees, on top of everything Wyoming already charges you.
At that point you are paying twice for one company. Forming directly in the state where the activity happens is usually cheaper and always simpler, even if that state has an income tax, because you were going to be exposed to it either way. The formation state never determined that; the activity did.
The case that catches sellers most often is fulfilment. Goods held in a third-party warehouse are inventory in that state, and that single fact can create both a registration obligation and sales tax nexus at once. A seller shipping from one fulfilment centre in Texas is better served by a Texas company than by a Wyoming one registered in Texas.
So the honest version of the question is not “which state is best” but “will this company touch the ground anywhere in the US”. If the answer is no, pick on cost and simplicity. If the answer is yes, pick the state it touches.
Frequently asked questions
Do I need to visit the US to form a company?
No. Formation, EIN and in many cases bank onboarding are all completed remotely. You do not need a US address of your own, a US partner, or a visa.
Can I be the sole owner as a non-resident?
Yes. Single-member LLCs owned entirely by non-US persons are ordinary and permitted. That structure is what triggers the Form 5472 obligation.
Does the state affect how quickly I can start trading?
Marginally. Processing times differ by state and by whether you pay for expedited handling, but the longer wait is almost always the EIN, not the formation.
Do I need a registered agent in every state?
You need one in your formation state, and in any state where you have foreign qualified. It is a legal requirement, not an optional service.
Is an LLC or a corporation better for a non-resident?
An LLC is simpler for most: no entity-level tax and lighter formalities. A C-corporation makes sense if you are raising institutional money or want to retain profits inside the company.
What happens if I stop paying the annual report?
The state will eventually mark the company delinquent and then administratively dissolve it. Banks may freeze accounts on a dissolved entity, and reinstatement costs more than the report would have.
Getting it right first time
For most founders reading this, Wyoming is the sensible default and New Mexico the cheaper alternative if you are watching every dollar. Delaware is a specific tool for a specific job. The genuinely expensive mistake is not picking the wrong one of the three — it is forming in a low-fee state while operating physically in a different one, and paying for both.
We form US companies for founders in more than 80 countries, including the EIN, registered agent and mailing address. See US company formation or talk to our team about which structure fits your plans.
This article is general information, current as at September 2026, and is not legal or tax advice. Remotix BPO is a business process outsourcing company and is not a law firm or an accounting firm. State fees change — confirm current figures before filing.
