- “Delaware has the lowest taxes”
- “Wyoming is the cheapest state to run a business”
- “Nevada has no state income tax”
These are very common messages from people planning to open an LLC.
So let’s clarify. Which state is actually the best?
The correct answer: your own state.
Why?
In short, registering an LLC in Delaware, Wyoming, Nevada, or any other state does not provide benefits and only creates additional expenses.
No matter where you initially register your business, you are legally required to register it in the state where you live and actually conduct business. At that point, it becomes a foreign LLC.
You cannot avoid the taxes and laws of your state of residence, even if your business is fully online.
As a result, registering an LLC in another state means:
- paying LLC registration fees twice
- paying a registered agent in another state
- paying additional taxes and fees
- higher accounting costs to comply with two states’ laws
If you register in Wyoming but operate in New York or California, penalties apply.
For example, Connecticut collected $1.3 million in fines for illegal business activity, with an average penalty of about $4,600.
The biggest misconception: registering a business in another state means paying taxes under that state’s rules. This is false.
How do you determine where taxes must be paid?
Remember the rule:
“Taxes are paid where money is made.”
Money is considered earned where your office is located. In 99% of cases, without employees or a separate office, your home address is your office.
Even if you work online or travel between states, ask yourself:
- where is my residence and lease agreement?
- which state issued my driver’s license?
- where do I file personal taxes?
- where is my phone and billing address registered?
- where is my bank and where do I spend profits?
That state is usually considered your place of business.
Conclusion: no matter how expensive it seems, the cheapest and safest option is registering your LLC in the state where you live.
Disclaimer: The information provided here is for general informational purposes only and does not constitute legal advice. Immigration rules may change. For guidance on your specific situation, always consult official sources or a qualified attorney.
