Lesson 3 of 15
Choosing the state for your LLC
This is where most first-time founders lose money. The state with the lowest filing fee is not automatically the cheapest place to run a company.
The rule most people miss
If your company carries on business in a state, that state generally expects you to register there as a foreign entity, appoint a registered agent there and pay its fees and reports. Forming somewhere else does not cancel that.
So a business run from Texas that forms in Wyoming often ends up paying Wyoming and Texas, with two agents and two sets of filings.
If you operate from one state and have a physical presence there, forming in that state is normally the simplest and cheapest option overall.
When a different state genuinely makes sense
- You have no physical presence anywhere in the US, which is common for non-resident online founders
- You are holding intellectual property or investments rather than operating
- You are raising outside investment and your investors expect a specific jurisdiction
What to compare between states
Look past the headline filing fee at the recurring cost and the reporting burden.
- Formation filing fee and processing time
- Annual or biennial report fee and deadline
- Franchise tax or minimum annual tax
- State income tax treatment and sales tax rules
- Whether member names appear in public records
- Any publication requirement
Frequently asked questions
Is Delaware better for a small business?
Usually not. Delaware suits companies raising institutional investment. A local business often just adds a second state's costs.
What counts as doing business in a state?
Definitions vary, but an office, employees, inventory, or regular in-person work in a state commonly triggers registration there.
Official sources
Prefer to have someone handle the filing?
You can file directly with the state using the steps above. If you would rather have Gullia Filing prepare and file your formation documents, run the name check and act as your registered agent, we handle the process end to end.