Choosing a state is the first real decision a foreign founder makes, and it is usually made badly. Most people register in Delaware because they read that Fortune 500 companies do, then spend the next three years paying for prestige they never use. The state you pick determines your annual costs, your privacy, your paperwork burden, and whether a bank in Ohio will even take your call.
There is no federal company registration in the United States, so every LLC belongs to one specific state. That is why hunting for a cheap LLC without checking the ongoing obligations associated with it tends to backfire around month thirteen. Filing fees are a one-time number. Annual fees are forever.
What Actually Differs From State to State
Five things vary, and only five really matter to someone living abroad:
- The formation fee
- The annual report or franchise tax
- If member names appear in public records
- If there is a state income tax on business profits
- If the state imposes strange local requirements, such as newspaper publication.
Everything else is roughly identical. Every state requires a registered agent with a physical street address inside that state, and your own company cannot serve as its own agent. Your business address can be in Bucharest or Manila, but that agent has to be local.
The States That Stay Out of Your Way
Wyoming
Wyoming charges about $100 to form an LLC and roughly $60 a year to keep it alive, with no state income tax and no requirement to publish member names in the public filing. It has been the quiet favorite of non-resident founders for years, largely because the annual paperwork is a single short report rather than a tax return.
The catch is reputation, not cost. Some payment processors and banks associate Wyoming with shell companies and apply extra scrutiny, so be ready to explain your business clearly.
New Mexico
New Mexico is the outlier that almost nobody mentions. Formation runs around $50, and there is no annual report at all, which means no yearly filing fee and no recurring deadline to miss from another time zone.
Delaware
Delaware deserves its reputation, just not for small companies. Its Court of Chancery handles business disputes without juries and has centuries of precedent behind it, which genuinely matters when institutional investors are involved. Formation costs around $110, and the flat annual franchise tax for LLCs is $400 regardless of revenue.
The States That Will Make You Wince
California
California charges a minimum annual franchise tax of $800, and it applies whether your company earned a million dollars or nothing at all. Worse, the state claims that tax from any LLC deemed to be doing business in California, which can include foreign-owned companies formed elsewhere that have California customers, employees, or property.
New York
New York still enforces a publication requirement that dates back to the era of print newspapers. New LLCs must publish notice in two newspapers designated by the county clerk for six consecutive weeks, then file a certificate of publication.
In Manhattan, that ritual can cost well over a thousand dollars in advertising rates alone. It protects nobody and warns no one, yet it remains mandatory.
Massachusetts and Nevada
Massachusetts charges $500 to form an LLC and $500 ($520 online) again every year for the annual report, among the steepest combinations in the country. Nevada markets itself as a privacy haven but stacks its fees, with articles of organization, an initial member list, and a state business license pushing the first year past $400 and annual renewals near $350. Neither state offers a foreign founder anything the cheaper options do not.
The Trap That Has Nothing to Do With Fees
Where you register is not the same as where you operate. If your company maintains an office, holds inventory, or employs staff in a second state, that state will expect you to register as a foreign entity there and pay its fees too.
For a founder abroad running a purely digital business, this rarely triggers. For anyone shipping physical products from a warehouse, it triggers immediately, and the cheap Wyoming filing becomes two filings.
The Federal Layer Applies Everywhere
State choice cannot solve federal problems. You will need an Employer Identification Number, and applying online requires a Social Security Number or ITIN, so most non-residents fax or mail Form SS-4 and wait several weeks for the IRS to respond.
Banking is the harder wall. Many American banks require an in-person visit or refuse non-resident owners outright, which is why fintech providers built specifically for foreign founders have become the default workaround.
Reporting rules have also shifted recently under the Corporate Transparency Act, with beneficial ownership requirements changing multiple times. This means you have to verify the current FinCEN guidance rather than trust an article written last year.
