Non-residents · States
Forming an LLC as a non-US resident: which state to choose?
For a non-resident, Wyoming, Delaware and New Mexico are the most-used states — each for good reasons (privacy, low costs, reputation). But be careful: the choice of state mainly affects US state taxation and privacy. It does not change your personal tax in your country of residence, which remains the decisive factor.
Does the choice of state really matter for a non-resident?
Yes, but not for the reasons people think. All LLCs are subject to the same federal US tax rules. What changes from one state to another is mainly: the cost of formation and maintenance, the filing obligations (annual report or not), the level of privacy (are members public?) and any state tax. For a foreign entrepreneur with no physical US activity, these criteria matter far more than the prestige of any given state.
Wyoming: why it appeals so much to non-residents
Wyoming has become the go-to destination for foreign founders. In a Forbes Business Council article, CPA Vincenzo Villamena explains that Wyoming has "no state income tax," doesn't charge a "franchise tax fee," and combines "straightforward regulations, low fees and strong privacy laws" (Forbes Business Council, "Why Non-US Residents Choose Wyoming For LLC Formation"). The article notes that in 2023, over 150,000 LLCs were formed in the state.
- No state income tax and no franchise tax.
- Strong privacy: members are not listed publicly.
- Low fees and formalities, well suited to remote management.
Delaware: the benchmark for corporations and fundraising
Delaware is the best-known state for companies, especially Corporations. Its reputation comes from a highly developed corporate law and its Court of Chancery, a specialized court favored by investors. It's often the default choice for a startup targeting a fundraising round from US funds. For a simple services LLC owned by a non-resident, however, its advantage is less obvious: it charges an annual franchise tax and doesn't necessarily add more than Wyoming or New Mexico.
New Mexico: discretion and minimal cost
Less publicized, New Mexico is valued for two reasons: high privacy (members are not disclosed) and no annual report for LLCs, which reduces ongoing fees and admin. It's a coherent choice for a small international structure seeking simplicity and discretion. (It's also the state where the entity behind Optimal Taxs is formed.)
Quick comparison
| State | Strengths | Often chosen by |
|---|---|---|
| Wyoming | No state tax, privacy, low fees | Freelancers, e-commerce, digital projects |
| Delaware | Renowned corporate law, investor standard | Startups targeting fundraising |
| New Mexico | Privacy, no annual report, minimal cost | Small, discreet international structures |
The trap to avoid: "no state tax" ≠ "no tax"
This is the most common mistake. The fact that a state like Wyoming charges no income tax does not mean your business is taxed nowhere. As a non-resident, you generally remain taxable in your country of tax residency. Choosing the state optimizes the US side (costs, privacy, state tax) — not your personal taxation abroad.
Key takeaways
- Wyoming: the non-resident favorite (cost, privacy, no state tax).
- Delaware: essential if you target fundraising, usually via a Corporation.
- New Mexico: discretion and minimal fees for a small structure.
- In all cases, the state doesn't settle your personal taxation: that depends on your residency.