Where to Form Your LLC

Choosing where to form your limited liability company (LLC) can sometimes be as perplexing as selecting the best legal structure for your new business. Some business owners pick the state where they live or where their LLC will be headquartered. Others opt to organize their LLC in another state for business advantages or professional opportunities.

Domestic LLC vs. Foreign LLC

You have two basic options for registering your LLC. You can choose to be:

• a domestic LLC in your home state, or
• a foreign LLC in another state.

A "domestic LLC" does business in the state in which it was formed. A "foreign LLC" is an entity that's transacting business in a state other than where it was originally formed. For example, suppose you organize your LLC in Arkansas. Your LLC does business in Arkansas and Louisiana. Your LLC would be considered a domestic LLC in Arkansas and a foreign LLC in Louisiana.

If your LLC does business outside its state of registration, then you must register your LLC in the other state. Registering your LLC outside your home state is called "foreign qualification." To qualify your business as a foreign LLC, you must file additional paperwork and pay a fee to the state where you want to do business.

Forming Your LLC In Your Home State

Many LLC owners decide to file in their home state as a domestic LLC if they're physically located and transact most of their business within that state. For example, if you run a retail boutique and make most of your sales in your home state, it probably makes sense to file your LLC in that same state.

Filing in your home state has several advantages.

Fewer Registration Requirements

When you do business in the same state where you organize your LLC, you're responsible for only one state's filing requirements. To create an LLC, you file articles of organization, sometimes called a "certificate of organization." Once you file your articles and the state accepts them, you're automatically authorized to do business in that state.

If you want to do business in a state where you didn't form your LLC, you'll need to get that state's permission to do business in that state. In other words, you must register your business in both states. In one state, you'll file articles to legally create your LLC. In the other state, you'll file a foreign registration statement.

States have different names for a foreign registration statement. Your state might call this document:

• a "certificate of authority"
• an "application for authority to transact business"
• an "application for registration," or
• an "application for foreign LLC."

A foreign registration statement looks a lot like the articles of organization. In your statement, you'll need to provide basic information about your LLC, such as your business name and address, contact information for the members, and the name and address of your registered agent in that state.

Keep in mind that if you do form your LLC in one state and qualify to do business in another, then you might not be able to use the same name for your LLC in both states. When you qualify as a foreign LLC in another state, you must provide a name for your LLC that's available for use. If your LLC's legal name isn't available in the other state, then you'll have to choose another, which can lead to additional filings and business complications.

For example, suppose you start a catering business. You organize your LLC in Tennessee under the name "The Table Catering LLC." You also want to do business in Georgia. But when you search the business records in Georgia, you see that another LLC is already registered under the same name. You can't register your LLC in Georgia under the name "The Table Catering LLC" because another business has already claimed that name in the state. You'll have to choose another name.

Typically, if you want to use a name for your business that's different from your LLC's legal name (the name that's on your LLC's formation paperwork), you'll need to register the alternative name. This alternative name is often called a "DBA" (short for doing business as), trade name, assumed name, or fictitious name. Registering a DBA requires additional paperwork and usually another fee.

In addition to the extra paperwork, having two names for your business might be less than ideal from a business perspective. You'll probably need to put marketing efforts into both names. You might also want to trademark both names.

Organizing your LLC in your home state would avoid these additional naming requirements and considerations. Moreover, you'd only have to worry about registering a trademark for one name, not two.

Less Costly: Fewer Filing Fees

Fewer registration requirements mean fewer filing fees. If you create your LLC in your home state, then there's no need to file a foreign registration statement in another state, which can save you hundreds of dollars. Fees vary for this document, but can range between $50 and $750. In addition, organizing your LLC in your home state will save you on maintenance fees down the line (as discussed below).

Cut Down on Maintenance Filings and Fees

LLCs have many advantages. But one of the disadvantages of this business entity is the associated ongoing legal requirements of an LLC. In most states, you must file a report for your LLC either every year or every other year. In the report, you usually confirm basic information about your LLC and keep your contact information up to date. In addition to a report, you usually must pay a filing fee, which could be minimal (like $10) or quite expensive ($500 in Massachusetts).

In general, the reporting requirement is the same for domestic LLCs and foreign LLCs. If you register in your home state, then you need to only worry about your home state's annual or biennial filing requirements. But if you organize your LLC in one state and do business in another, then you'll be responsible for twice the periodic reporting requirements.

For example, suppose you organize your LLC in Maine. But you register to do business as a foreign LLC in New Hampshire. Every year, you'd need to file an annual report with the Maine Secretary of State and pay the $85 filing fee (as of 2025). However, you'd also need to submit an annual report with the New Hampshire Department of State and pay the $100 filing fee (as of 2025). Moreover, you'd need to keep track of the deadlines to file each state's reports: June 1 for Maine and April 1 for New Hampshire.

By organizing your LLC in your home state, you'd just need to keep track of one report and one deadline, and pay one filing fee.

No Need for Additional Registered Agents

When you create your LLC or register to do business in another state, you'll almost always need to choose a registered agent that's located within the state of registration. For example, if you form your LLC in Virginia and then register to do business in Kentucky, you'll need to appoint two registered agents: one located within Virginia and one located within Kentucky.

If you organize your LLC in your home state, then you only need to appoint one registered agent. Oftentimes, a resident LLC member can serve as its business's registered agent.

Forming Your LLC Outside Your Home State

While the majority of business owners form LLCs in their home state, not everyone does. For instance, some start-ups plan to transact business in numerous states, including the state where most LLC members reside or where their LLC will be headquartered. If you plan to operate a multi-state business, then you might benefit from choosing one state over another to form your LLC.

Three states are often hailed as business-friendly bases for registering as foreign LLCs.

Starting an LLC in Delaware

Delaware has a long tradition of being pro-business. Two-thirds of Fortune 500 companies have been formed in Delaware. The First State is a popular choice for many reasons:

• Delaware's LLC formation statutes are very accommodating, progressive, and well-developed. For example, the state doesn't have residency mandates for registering your LLC.
• Delaware offers LLC owners significant protection from privacy concerns. You don't have to give any information about your LLC's members or managers when you file your certificate of formation.
• Delaware is one of the handful of states that doesn't require LLCs to submit an annual report.
• There are no corporate income taxes for foreign LLCs that don't do business in Delaware.
• Delaware boasts a special business court, the Delaware Court of Chancery, with over 200 years of experience handling commercial disputes and interpreting business laws. Its Division of Corporations is known for its fast and efficient services utilizing state-of-the-art technology.
• Investors might be more likely to invest in a company that's formed in Delaware.

For more information about the business formation process in Delaware, including answers to frequently asked questions, read about how to start an LLC in Delaware.

Starting an LLC in Nevada

This western state is another business-friendly location with laws that are favorable to business entities and their management. Like Delaware, Nevada's courts are viewed as pro-business.

Nevada doesn't impose corporate, personal income, or franchise taxes. But forming your LLC in Nevada doesn't necessarily help you save on taxes. If you do business outside of Nevada, you'll still owe taxes to the other states. So you shouldn't rely on tax savings when considering Nevada.

In addition, Nevada isn't the most budget-friendly state to start your LLC. While, as of 2025, you'll only need to pay $75 to file your articles of organization, you'll need to pay $150 to submit your initial list of managers or members and $200 for a business license application. In total, the cost of forming an LLC in Nevada is $425, one of the highest in the country.

In addition, you must pay $350 every year ($150 for an annual list and $200 to renew your business license) to keep your LLC in good standing in Nevada.

These high costs, combined with the little benefit you'll receive from Nevada's laws and courts, make Nevada a less attractive option for out-of-state businesses than Delaware.

Starting an LLC in Wyoming

Wyoming is another state that's seen as very business-friendly. Like Delaware, it offers critical privacy advantages for LLC members. When you form your LLC in Wyoming, you don't need to disclose the names or contact information of your LLC members in your articles of organization.

Wyoming is also relatively inexpensive. As of 2025, the fee to form an LLC is $100. You'll need to pay a license tax for your LLC every year. The tax is the greater of $60 or two-tenths of one mill on the dollar ($.0002) of the value of your LLC's assets located in Wyoming. If you're operating your business outside of Wyoming and don't have any assets within the state, then you can expect to pay just $60 per year to maintain your LLC's registration in Wyoming.

Like Nevada, Wyoming doesn't have any corporate income, personal income, or franchise taxes. But again, if you do business outside of Wyoming, then you'll still be responsible for the taxes owed to those other states.

Where Should Professionals Form LLCs?

If you're a professional who wants to form an LLC, then your options might be slightly limited. Not every state allows professionals to create a regular LLC. Instead, some states require professionals to form a professional LLC or professional corporation. In California, for example, professionals can't form regular LLCs. Also, California doesn't recognize professional LLCs. So, most professionals in California end up starting professional corporations.

The types of business entities a state recognizes or requires could factor into your decision of where to form your LLC. For example, suppose you want to run an accounting firm in the Bay Area. You've compared the different business structures and decided that an LLC fits your business purposes best. You might decide that it's worth legally creating your LLC in Delaware (where professionals can start LLCs) and then qualifying to do business in California.

If you need more personalized guidance, consider speaking with a business attorney. They can help you sort through your options and can help you weigh the pros and cons of forming an LLC in your home state versus another state.