Can I form in Wyoming to avoid California taxes?

No. If you live and work in California, your Wyoming LLC is doing business in California, must register there as a foreign LLC, and owes California's $800 minimum franchise tax. You end up paying both states rather than neither.

Is Delaware worth the extra cost?

For a self-funded small company with no US presence, usually not — it costs $300 a year against Wyoming's $60. Delaware earns its price when you raise investment, because its case law is deep and investors recognise it instantly.

Why do people recommend New Mexico?

It has the lowest running cost of any state: $50 to file and no annual report at all. The trade-off is that nothing ever reminds you the company exists, and founders lose track of New Mexico LLCs while federal obligations continue to accrue.

US company formation: choosing your entity and your state

Guide · 2 min read

Best state to form an LLC: a decision framework, not a ranking

There is no best state, only a best state for your facts. The rule is two sentences long, and most articles on this topic get it wrong.

The short answer

If you have a physical presence in a US state — employees, an office, inventory, or yourself — form there. If you have no US physical presence, the state is a free choice, and Wyoming and New Mexico are the cheapest credible options at $100 and $50 to file.

If you have a physical presence in a US state, form there. If you have no US physical presence at all, the state is genuinely a free choice.

If you operate somewhere in the US

Physical presence means employees, an office, inventory in a warehouse, or you living there. That creates nexus, and nexus means the state can tax you and requires you to register.

If you have no US presence

This is most international founders. With no nexus anywhere, no state has a claim on your income, so you are choosing on cost, privacy and how recognisable the name is to a bank.

State	Filing fee	Annual cost	Reasonable when
Wyoming	$100	$60 minimum annual report	The sensible default — cheap, private, quick
New Mexico	$50	None	Lowest possible running cost
Delaware	$90	$300 franchise tax, due 1 June	You expect investors, or want instant recognition
Florida	$125	$138.75 annual report	You have an actual Florida presence

Checked against state fee schedules in August 2026. Fees change — confirm with the Secretary of State before filing.

For the entity type question, see LLC vs C-Corp.

Frequently asked questions

Can I form in Wyoming to avoid California taxes?: No. If you live and work in California, your Wyoming LLC is doing business in California, must register there as a foreign LLC, and owes California's $800 minimum franchise tax. You end up paying both states rather than neither.
Is Delaware worth the extra cost?: For a self-funded small company with no US presence, usually not — it costs $300 a year against Wyoming's $60. Delaware earns its price when you raise investment, because its case law is deep and investors recognise it instantly.
Why do people recommend New Mexico?: It has the lowest running cost of any state: $50 to file and no annual report at all. The trade-off is that nothing ever reminds you the company exists, and founders lose track of New Mexico LLCs while federal obligations continue to accrue.

Sources

Last reviewed August 23, 2026. Verify against the primary source before acting.

Founders 8 does not provide tax advice. Tax residency depends on facts and rules specific to each jurisdiction — review your position with a qualified adviser.

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