States comparison, best states for LLC formation

States Compare LLC Formation: In which state?

The decision to set up a Limited Liability Company (LLC) in the USA is the first step towards entrepreneurial success. But which state offers the best conditions? The choice of state can be decisive for the costs, taxes and legal framework of your company. In this article, we compare the states that offer particularly favorable and business-friendly conditions so that you can recognize the differences and make the right decision.

A comparison of the best states for LLC formations

1. delaware

Delaware has long been the most popular state for business formations, especially LLCs:

• Low start-up fees: The costs for the Registration of an LLC are low compared to many other countries.
• No minimum capital required: There is no legal requirement for minimum capital when forming an LLC.
• Flexible corporate structure: Delaware allows great freedom in the organization of the corporate structure and management.
• Renowned commercial court (Court of Chancery): A specialized court for commercial law, known for quick and expert decisions.
• No income tax for companies that do not operate in Delaware: LLCs operating outside of Delaware are not required to pay income tax to the State of Delaware.

Maintenance costs:

One Non-Domestic LLC (also referred to as a foreign LLC) in Delaware must pay the following fees annually:

1. Annual franchise tax: $300
   This fee is due annually and must be paid by June 1 in order to maintain the good reputation of the LLC in Delaware maintain
2. The franchise tax is due for the first time in the year following the formation of the LLC and every year thereafter
3. Delaware LLCs do not have to renew a state business license or pay a fee to do so

In total, the annual mandatory fees for an LLC in Delaware amount to $300.

Dates:

• The franchise tax is due for the first time in the year following the formation of the LLC and every year thereafter
• Although LLCs are not required to file an annual report, the Delaware General Corporation Law requires companies to file an annual report and pay the franchise tax by March 1 each year
• The Form 1120 and Form 5472 by April 15 of the following year must be submitted.

2. wyoming

Wyoming also offers very attractive conditions:

• No income tax for corporations and individuals: Neither LLCs nor their owners are required to pay income tax to the state of Wyoming.
• Low annual fees: The annual cost of maintaining an LLC is low.
• Strong privacy protections for LLC owners: Wyoming requires minimal public information about the owners of an LLC.
• No minimum capital requirements: Similar to Delaware, Wyoming does not require a minimum amount of capital upon formation.
• Wyoming LLCs offer strong liability protection and allow for anonymous ownership, making them particularly attractive for certain business models

Anonymity of a Wyoming LLC

Maintenance costs:

A non-domestic LLC (also referred to as a foreign LLC) in Wyoming must pay the following fees annually:

1. Annual list fee: $60
   This fee is due when the LLC files its annual report with the Wyoming Secretary of State
2. Annual business license fee: $50
   This is the fee for the renewal of the state business license

In total, the mandatory annual fees for a LLC in Wyoming i.e. to $110.

Dates:

• The annual report and business license renewal must be filed by the first day of the LLC's formation month
• Beginning in the second year of operation, every LLC in Wyoming must complete an annual report and pay license tax
• The Form 1120 and Form 5472 by April 15 of the following year must be submitted.

How much does it cost to incorporate a company in Wyoming?

3. nevada

Nevada is known for its business-friendly legislation:

• No income tax for businesses and individuals: Like Wyoming, Nevada does not impose an income tax.
• No exchange of information with the IRS: Nevada does not share information about LLCs or their owners directly with the U.S. Internal Revenue Service (IRS). This means more privacy, but does not relieve you of federal tax obligations.
• Strong protection from personal liability: Nevada offers robust protection of LLC owners' personal assets.
• No franchise tax: There is no annual flat tax for the right to operate as a business in the state.

Special features of anonymity in Nevada

Maintenance costs:

A non-domestic LLC (also known as a foreign LLC) in Nevada must pay the following fees annually:

1. Annual list fee: $150
   This fee is due when the LLC files its annual list with the Nevada Secretary of State
2. Annual business license fee: $200
   This is the fee for the renewal of the state business license

In total, the mandatory annual fees for a non-domestic LLC in Nevada i.e. to $350.

Dates:

• The annual list and business license renewal must be filed by the last day of the LLC's formation month
• Foreign LLCs must publish an annual statement every year. The due date for this is in March.
• The Form 1120 and Form 5472 by April 15 of the following year must be submitted.

How much does it cost to incorporate a company in Nevada?

4th Florida

Florida is becoming increasingly popular for LLC formations:

• No income tax for individuals: LLC owners pay no personal income tax to the state of Florida.
• Relatively low formation and annual fees: The costs for founding and maintaining an LLC are moderate.
• Quick and easy formation process: Florida offers an efficient online system for LLC formation.
• Favorable business environment: The state actively promotes business growth and innovation.
• Florida does not offer anonymous ownership for LLCs, the member's details are published in the commercial register.
• If you wish to do business under a name other than the official LLC name (DBA), an additional $50 will apply. This registration is valid for 5 years

Maintenance costs:

A non-domestic LLC (also known as a foreign LLC) in Florida must pay the following fees annually:

1. Annual reporting fee: $138.75
   This fee is due when the LLC files its annual report with the Florida Department of State

In total, the annual mandatory fees for an LLC in Florida amount to $138.75.

Dates:

• The annual report must be submitted and paid on time, otherwise a penalty of approx. $400 may be incurred.
• The report must be submitted annually to the Ministry of Foreign Affairs by May 1.
• The Form 1120 and Form 5472 by April 15 of the following year must be submitted.

5. texas

Texas also offers favorable conditions:

• No income tax for individuals: Like Florida, Texas does not impose a personal income tax.
• Low franchise tax for LLCs: There is a low annual tax based on the LLC's revenue.
• Large and diverse economy: Texas offers a wide range of business opportunities in various industries.
• Business-friendly climate: The state is known for its support of companies and entrepreneurship.
• Texas is one of the few states that does not charge an annual fee to maintain an LLC.
• If changes need to be made to the LLC, additional fees may apply. For example, a certificate of amendment costs $150 ($25 for non-profit organizations).
• Foreign (not incorporated in Texas) LLCs wishing to do business in Texas must pay a one-time registration fee of $750.

Maintenance costs:

A non-domestic LLC (also known as a foreign LLC) in Texas must pay the following fees annually:

1. Annual reporting fee: $0
   There is no annual fee for filing the Public Information Report in Texas.
2. Franchise tax: Variable
   LLCs in Texas may have to pay a franchise tax if their annual revenue exceeds a certain threshold (currently $2.47 million for the 2024 tax year).

In total, the annual mandatory fees for an LLC in Texas amount to $0, provided no franchise tax is due.

Dates:

• The annual Public Information Report must be submitted by May 15.
• Although there is no fee, late filing may result in a penalty of $50.
• The Form 1120 and Form 5472 by April 15 of the following year must be submitted.

6 New Mexico

New Mexico is an often overlooked but attractive state for LLC formations:

• No franchise tax or annual LLC fee: No regular fees are payable to the state after formation.
• High level of privacy: New Mexico requires minimal public information about LLC owners.
• Simple foundation process: Registering an LLC is straightforward and can be done online.
• No residency requirement: Owners or managers do not have to be residents of New Mexico.
• Some counties in New Mexico may require a business license. However, if you live in another state and are not physically operating in New Mexico, you do not need to worry about a business license
• New Mexico offers the option to reserve a business name for 120 days, which costs $20

How much does it cost to incorporate a company in New Mexico?

Maintenance costs:

A non-domestic LLC (also referred to as a foreign LLC) in New Mexico must pay the following fees annually:

1. Annual reporting fee: $0
   There is no annual fee for filing the Public Information Report in New Mexico.
2. Flat-rate tax: $50
   Although there are no annual fees, an annual lump sum tax of $50 may apply

In total, the mandatory annual fees for a LLC in New Mexico to $50.

Dates:

• New Mexico does not require an annual report for LLCs, so there is no annual fee.
• The Form 1120 and Form 5472 by April 15 of the following year must be submitted.

Important additional information on dates:

• Penalties of at least $500 / day may be imposed for late submission or incorrect completion
• It is possible to extend the deadline for filing Form 1120 by 6 months by using Form 7004.
• The deadline for payment of any taxes cannot be extended.
• Some LLCs may work with a different fiscal year. In these cases, different deadlines may apply.

Factors for choosing the right state

When deciding on a federal state, you should consider the following aspects:

1. Taxes: Compare income, franchise and sales taxes. Each state has its own tax system.
2. Fees: Be aware of incorporation and annual reporting fees. These can vary considerably from state to state.
3. Legal protection: Some states offer better protection against personal liability. This is important to protect the personal assets of LLC owners.
4. Privacy: Some states require less public information about LLC owners, which may be important for some business owners.
5. Business location: If you are physically operating in a state, it may make sense to incorporate there to avoid additional registrations.

Explanation of some key terms

• Minimum capital requirements: Some states require a minimum amount of capital when forming an LLC. In most of the states mentioned, there is no such requirement, which makes formation easier.
• Franchise tax: A tax levied by some states for the right to do business there. Not all states have such a tax.
• Exchange of information with the IRS: Refers to how much data a state automatically forwards to the federal tax authorities. Less exchange means more privacy, but does not release you from tax obligations.

Conclusion

Choosing the right state for your LLC formation depends on your specific business needs. While Delaware, Wyoming and Nevada are often considered top choices, states such as Florida, Texas and New Mexico also offer attractive conditions. Each state has its own pros and cons that should be carefully weighed. Consider your individual needs and, if necessary, consult a legal expert or tax advisor to make the best decision for your business.