The best state to form a US company: Delaware, Wyoming or New Mexico?

The myth that costs people money

"Incorporate in Delaware, it is where the big companies are." That advice is right for a very small slice of founders and charges everyone else an annual fee for benefits they will never use.

Delaware genuinely is home to most listed US companies. The reason is purely legal: its Court of Chancery is the most experienced business court in the country and its corporate law has been tested in thousands of cases. That matters to a company negotiating a forty-million-dollar round. It does not matter to a one-person online store.

The three numbers that separate them

Ignore everything else and compare these:

1. The filing fee — paid once.
2. The recurring annual cost — the annual report and franchise tax. Paid every year, and the real determinant of cost.
3. Turnaround — relevant only if you have a deadline.

Current figures for every state we file in are on the state comparison page, taken from the same table that prices your order, so they do not go stale with this article.

Wyoming

Best for: e-commerce, Amazon FBA, solo founders, remote services.

No state income tax, low annual fees, and reasonable owner privacy in the public register. Its standing with banks and payment platforms is settled and well understood — a practical point worth stating, because some less familiar states prompt extra questions in compliance review.

New Mexico

Best for: the lowest possible cost, side projects, tight budgets.

Its decisive advantage is that it requires no annual report from LLCs — no recurring state fee at all after the year of formation. Over five years that is a real difference against any other state.

The trade-off: it registers less readily with financial institutions than Wyoming and occasionally needs explaining. Your federal obligations are entirely unchanged either way.

Delaware

Best for: anyone raising venture capital, issuing equity to a team, or joining an accelerator.

If that is you, do not debate it — investors expect it, the standard documents are written around it, and departing from it means bespoke legal review at every round.

If that is not you, you are paying an annual franchise tax for a legal apparatus you will never touch.

"Form in your home state?" — a question that does not apply to you

That familiar American advice is aimed at people who live in the US. You do not, so the question becomes: do I have a physical presence in one particular state?

• An office or an employee in a state → form there.
• Inventory in an Amazon warehouse in a state → you may owe a foreign qualification there whatever state you formed in.
• None of the above → you are free, and cost decides it.

Is privacy a good enough reason?

Some states do not publish owner names in the public register, and this gets marketed hard. Be precise about what it buys: the privacy is from the public, not from your bank, not from the IRS, and not from a court. Anyone selling you "complete secrecy" is selling a fiction.

What about Florida, Texas and Nevada?

Three cases worth clearing up, because they come up constantly:

• Florida — sensible if your customers, suppliers or partner are there, or if you visit the US regularly and prefer a state you know. Its annual fees are higher than Wyoming's.
• Texas — an enormous domestic market, and the right answer for anyone with real activity in it. Do not pick it because it is "big" if every customer you have is outside the US.
• Nevada — heavily marketed on privacy, and its annual cost is higher than most people expect from the way it is written about. Compare the number before deciding.

The same rule covers all three: with no physical presence in the state, you are paying an annual premium for something you will not use.

What the state does not change

People assume picking the "right" state settles tax questions. It does not. These are identical whatever you choose:

• Your federal obligations at the IRS — the annual return and Form 5472 where it applies.
• Needing an EIN, and how long it takes to issue.
• What banks and payment platforms require of you.
• Having a registered agent — mandatory in every state without exception.

What the state does change is the annual report, the franchise tax, and state income tax where one exists. That is the whole list.

And if you choose wrong?

Domesticating to another state is possible. It costs time and fees and may mean updating the bank account. Not a disaster — but it is work that ten minutes of thought now avoids.