Best US States to Form an LLC as a Foreigner: Full Guide

The US has 50 states, each with its own unique rules and regulations for company formation. The sheer number of choices can make it difficult to figure out which state is best for LLCs for non resident aliens. Don’t worry — that’s where we come in. 

In this article, we’ll tell you all there is to know about the best states for nonresident LLCs. We’ll discuss some of the main factors you should consider when picking a US state to open an LLC in, and we’ll give you an overview of the top 4 states to do just that. 

Without further ado, let’s dive in. 

Which State is Best For LLC for Non Resident Aliens?

The most important thing when picking which state to form LLC in the US is the location of your future business operations. If your plan is to operate a US-based business and have US-source income, the state in which that business is physically located is the state in which you must open an LLC. 

For example, let’s say you want to open a restaurant in New York City. Because the restaurant is physically located in New York and you’ll be selling food from it (i.e., physical goods), you’ll have to open an LLC in New York. Or, let’s say, for instance, your goal is to buy a house in Florida and turn it into a rental property. In that case, you’d have to open an LLC in Florida. Basically, every US state has its own rules, income, and sales taxes, and the only way to legally deal with all of that is to open an LLC in the state in which you plan to open a physical business. 

On the other hand, if you plan to have your business operations set in a foreign country and not have US-source income, the question of which state is best for LLC for nonresident businesses becomes actually relevant. 

Need help opening a US LLC as a foreigner? NRI offers company formation services that include LLC registration, getting you both EIN and ITIN numbers, helping you with corporate bylaws and operating agreements, and much more. 

Open LLC in USA for Nonresidents: 5 Main Things to Consider

Choosing the right US state to open an LLC becomes important if you don’t plan to have a US-based business operation. Making the correct decision can greatly influence your business in various ways. That’s why, before you settle on a specific US state, you should carefully consider the following factors:

1. One-Time Filing Fees

US states have different filing fees that you have to cover when you first open an LLC. These one-time payments can range from a paltry $50 all the way to $800 and, in some cases, even more. 

For example, in New York State, apart from the regular company formation filing fee of $200, you must also pay for the publication of notices in at least two local newspapers. Depending on the newspaper, these publication fees can cost over $1000. You’ll also have to pay $50 for a publication certificate, making the potential initial cost of forming an LLC just over $1200. All these fees make New York State not the best state for nonresident LLCs.

2. Yearly Fees

To keep your US LLC from getting shut down, you must pay yearly fees to the state where you formed it. These yearly payments are also called Annual Report Fees or Franchise Taxes and are different for each state. For example, California has a minimum fee of $800 (called Annual Franchise Tax), while Delaware has a yearly fee of at least $300 (called Annual Report Fee). To maximize your company’s profits and minimize the amount of money you spend on government fees, your best bet is to look for a US state with low annual fees. 

3. Level of Anonymity 

Anonymity and keeping your personal information private can be important factors when discussing which state is best for LLC for nonresidents. Suppose you want to keep your private information safe and ensure there’s no publicly available register of all the names associated with your US LLC. In that case, you might want to pick a state that provides a high level of protection when it comes to your personal information. 

4. Time It Takes to Open an LLC

Another important factor when choosing which state to form LLC in is the time factor or how long it takes to form a company. For example, in the state of Delaware, opening an LLC can last between 1 and 3 days, and the whole process can be done online. In Wyoming, the process of opening an LLC is instantaneous and is technically over as soon as you finish an online application. On the other hand, doing the same in California can last between 1 to 2 weeks. You can technically open an LLC in California in 24 hours, but you’ll have to pay an additional $350 to do that. 

5. Can the Process Be Done Online?

When choosing which state to form LLC as a nonresident, you should consider whether the entire process can be done online. If it can’t be done online, you’ll have to physically travel to the US, leading to additional costs.  

For example, in states like Delaware, Nevada, and Wyoming, opening an LLC can be done online. On the other hand, Misisipi, Alabama, and Kentucky have certain restrictions and may require you to deliver specific documents in person or send them in by mail. 

Which State Is Best for LLC for Nonresident?

Here’s a list of the 4 best states for nonresident LLCs:

1. Wyoming

The state of Wyoming is, by many different metrics, the best state for nonresident LLCs. In fact, Wyoming is the first US state to allow LLC formation. The state is known for its business-friendly legislation and offers many advantages to those who want to open LLC in USA for nonresidents, including:

• No state income tax — you don’t have to pay taxes on the income your LLC generates 
• Low filing fees — to open an LLC in Wyoming, you can expect to pay between $100 and $150
• Low annual fees — if your business assets in Wyoming don’t exceed $250,000 in value, you’ll only have to pay $60 in yearly fees
• Company formation process can be done online — in Wyoming, foreigners can open an LLC online without needing to be physically present
• High levels of anonymity — in the state of Wyoming, information about LLC owners and members does not have to be publicly listed
• Fast processing times — in Wyomignh, the entire process of opening an LLC can last between 1 to 3 days

2. Delaware

Delaware comes in as a close second on our list of best states for nonresident LLCs. The main reason for this is that this state is “somewhat blacklisted” by certain countries due to it greatly favoring business in its legislature. 

For example, Brazil lists Delaware as a “tax haven” and treats LLCs from that state differently, imposing additional regulations and inspections. The country of Croatia did the same and has blacklisted almost all LLCs from Delaware. Despite that, Delaware does have an advantage over other states — the best rules and regulations for businesses. The state has made a business out of supporting businesses and even has a special court system, the Court of Chancery, which strictly deals with business-related issues. Additionally, Delaware has a huge number of specialized business lawyers and is probably the best place for startups looking for or about to receive money from VC funds. 

The main factors that make Delaware one of the best states for nonresident LLCs are:

• No state income and sales tax — in Delaware, LLCs don’t have to pay taxes on income or sales, a huge advantage to businesses that sell goods or services
• Low filing fees — initial fees that you have to cover when opening an LLC in Delaware are just around $110
• Medium annual fees — yearly fees are a bit higher in Delaware than in Wyoming and are $300.
• Open LLC online — in Delaware, the entire process of opening a company can be done online
• High levels of anonymity — the state of Delaware doesn’t require LLC owners to publicly post their personal information
• Fast processing times — it usually takes only one business day to open an LLC in Delaware

3. New Mexico 

New Mexico is another excellent state for nonresident LLCs, offering many advantages. The state has recently changed its laws to attract and accommodate entrepreneurs worldwide, and it’s the cheapest state by far.

Some of the main factors that make New Mexico one of the best state for nonresident LLCs are:

• Low-income tax — income tax in New Mexico is only 4,8% or up to half a million in profits, which makes this state great for small to medium-sized businesses
• Low filling fees — to open an LLC in New Mexico, you’ll only need to pay $50
• No annual fees — in the state of New Mexico, there are no mandatory yearly fees for LLCs
• Company formation can be done online — from beginning to end, the entire process of opening an LLC can be done online
• High privacy levels — there are no requirements for LLC owners to publicly list their personal information
• Fast processing times with fees — if you pay expedited fees, you can open an LLC in New Mexico in 1 to 3 business days. However, the process can take up to 3 weeks if you don’t.

As a disclaimer, we have to mention that certain banks (e.g., Stripe) won’t allow you or will make it difficult to open a US bank account with them if you have an LLC in New Mexico. 

4. Nevada

Nevada is the last on our list of the best states for nonresident LLCs. Most similar to Wyoming but with higher fees, Nevada is an excellent option for foreigners looking to open an LLC in the US. The main factors that make it a great place for that include the following:

• No income tax — there’s no income tax in the State of Nevada
• Medium filling fees — opening an LLC in Nevada costs around $300
• Low annual fees — annual fees to keep an LLC open in Nevada are around $200
• Company formation can be done online — the entire process of opening an LLC in Nevada can be done online
• High privacy levels — Nevada currently has laws that protect the anonymity of LLC owners and members
• Fast processing times with fees — it takes 1 business day to open an LLC in Nevada; by paying an expedited fee of $125, you can reduce the time it takes to form a company to less than 24 hours

Which State Is Best for LLC for Nonresidents: Comparison Table