The best US state to form an LLC as a non-resident: Wyoming, Delaware and New Mexico compared

Non-resident founders forming a US LLC face a surprisingly narrow decision. The federal tax obligations are identical regardless of which state you choose, so the real variables boil down to cost, privacy and ongoing compliance burden. Three states dominate the conversation: Delaware, Wyoming and New Mexico. Each has a distinct profile, and the right pick depends on what you actually need the LLC for, not on which state sounds most prestigious. Most non-residents without US investors or US-based operations will find that the best state to form an LLC as a non-resident is whichever one costs the least to maintain and discloses the least about its members. This guide compares the three front-runners, covers the states you can safely ignore, and clarifies what stays the same no matter where you file. All figures and rules referenced are current as of 2026; confirm specifics with a qualified US adviser before acting, as state fees and filing requirements change.

Does the state actually matter for a non-resident?

Less than most people think. A foreign-owned single-member LLC has the same federal filing requirements whether it sits in Delaware, Wyoming, New Mexico or any other state. You will still file Form 5472 with a pro-forma Form 1120 each year, with a US$25,000 penalty for failing to do so. You will still be subject to the federal ETBUS (engaged in a trade or business in the United States) and effectively connected income tests. And if you sell to US customers, you can still trigger sales-tax nexus obligations in the states where those customers are located, regardless of where your LLC is registered.

The state of formation controls three things: the annual fees you pay to keep the LLC alive, the level of privacy around member and manager identities, and the body of case law that governs internal disputes. For a non-resident running a services or holding company with no US office and no plans to raise venture capital, those differences are real but modest. Choose on cost and privacy, not prestige.

Delaware: the VC standard, and its cost

Delaware earned its reputation through the Court of Chancery, a specialised business court with decades of well-developed LLC and corporate case law. If you are raising US venture capital, investors and their lawyers will almost certainly expect a Delaware entity, though usually a C-corp rather than an LLC. For a non-resident forming a straightforward LLC, Delaware's legal infrastructure is often more than you need.

The cost reflects that. Delaware charges a flat US$300 annual franchise tax on LLCs, payable every year by 1 June. On top of that, you will need a registered agent in the state, which typically runs US$50 to US$200 per year depending on the provider. Delaware does not require member names on public filings, so privacy is reasonable, but the franchise tax alone makes it one of the more expensive states for a simple LLC. If you have no US investors and no litigation-sensitive structure, a Delaware LLC is often over-engineered for the job.

Wyoming: the lean, private default

Wyoming is the state most commonly recommended for non-residents who want a low-cost, privacy-friendly LLC. Member and manager names do not appear on public filings, which is a genuine advantage for founders who prefer not to have their ownership details in a searchable state database.

The annual report fee is roughly US$60, making ongoing costs minimal. Wyoming has no state income tax, though this matters less than it sounds for a non-resident: if you have no US-source income, state income tax is largely irrelevant regardless of where you form. The state's LLC Act is modern and flexible, offering strong charging-order protections and straightforward operating-agreement provisions. For a services business, a consultancy, or a holding structure, Wyoming is the lean default that is hard to beat on a cost-to-value basis.

New Mexico: the cheapest to maintain

New Mexico takes the low-cost approach further. It has no annual report requirement for LLCs, which means no recurring state filing and no annual fee beyond the initial formation cost. For founders whose primary concern is minimising ongoing compliance and expense, this makes New Mexico arguably the cheapest state to form and maintain an LLC in the US.

Privacy is also strong: New Mexico does not require member or manager names on the Articles of Organisation. The trade-off is a thinner body of LLC case law compared to Delaware or Wyoming, but for a non-resident running a simple structure, this rarely matters in practice. The main risk is that some banks and payment processors are less familiar with New Mexico LLCs, which can occasionally cause friction during account opening. If that does not concern you, New Mexico deserves serious consideration.

Nevada and the others, briefly

Nevada markets itself aggressively as a business-friendly state, and it does have no state income tax. But its annual fees are higher than Wyoming's, typically US$150 to US$350 depending on the filing, and it imposes a commerce tax on businesses with Nevada-sourced gross revenue above US$4 million. For a small non-resident LLC, Nevada rarely beats Wyoming or New Mexico on cost, and its privacy protections are no longer meaningfully stronger.

Other states occasionally surface in these discussions: Florida, Texas, South Dakota. None of them offer a compelling combination of low fees, strong privacy and minimal reporting that would justify choosing them over the three main contenders. Unless you have a specific operational reason to form in a particular state (such as a physical office or employees there), stick with the shortlist.

State income tax, franchise tax and annual reports compared

A side-by-side comparison makes the differences concrete:

For a non-resident with no income sourced to any US state, the state income tax row is effectively zero across all three. The meaningful differences sit in the franchise tax and annual report lines. Delaware costs roughly US$350 to US$500 per year in state fees and registered-agent costs combined. Wyoming comes in around US$110 to US$210. New Mexico can be as low as US$50 to US$150, depending solely on your registered-agent provider.

What does not change with the state: your federal filings

This is the part that catches people out. Regardless of which state you choose, a foreign-owned single-member LLC must file Form 5472 with a pro-forma Form 1120 annually with the IRS. The penalty for failing to file is US$25,000 per form, per year, and the IRS does enforce it.

You will also need an EIN (Employer Identification Number) for the LLC. Note that under FinCEN's August 2026 final rule, Corporate Transparency Act beneficial-ownership reporting no longer applies to US-formed companies; only entities formed abroad and registered in a US state report. If your LLC earns income that is effectively connected with a US trade or business, you will owe federal income tax on that income regardless of where the LLC is formed. If you sell taxable goods or services to customers in states with sales-tax obligations, you may need to register and collect sales tax in those states, again independent of your formation state.

The state is a wrapper. The federal obligations are the substance. Any adviser who tells you that forming in a particular state will reduce your federal tax burden is either confused or misleading you.

Choosing for your business

The decision tree is simpler than the marketing from formation services would suggest:

• You are raising US venture capital: form a Delaware C-corp (not an LLC), because that is what investors expect and what their lawyers will draft documents for.
• You want a low-cost, private LLC for services, consulting or holding IP: Wyoming is the standard choice. The fees are low, the privacy is strong, and banks are familiar with Wyoming LLCs.
• You want the absolute lowest ongoing cost and have no concerns about bank-account friction: New Mexico eliminates the annual report entirely and keeps costs minimal.
• You have a physical presence or employees in a specific state: form in that state, because you will likely need to foreign-qualify there anyway, doubling your fees if you formed elsewhere.

Do not choose a state based on prestige. Choose based on your actual operating structure, your budget for ongoing compliance, and your privacy preferences.

How Cosmos helps

Cosmos coordinates US LLC formations through licensed US partners, handling the paperwork and guiding you through state selection based on your specific situation. Rather than defaulting every client to Delaware, the Cosmos team walks through your business model, your investor plans and your budget to recommend the formation state that actually fits.

Post-formation, Cosmos can connect you with US tax professionals for your Form 5472 filing and ongoing federal compliance, so you are not left guessing about the obligations that follow incorporation. The goal is to get you set up correctly from the start, not to sell you the most expensive option.

Frequently asked questions

Do I need a US address to form an LLC? You need a registered agent with a physical address in the state of formation. You do not need to live in the US or have a personal US address. Your registered agent receives legal and state correspondence on the LLC's behalf.

Can I open a US bank account for my non-resident LLC? Yes, though the process varies by bank. Some require an in-person visit; others accept remote applications with proper documentation. Wyoming and Delaware LLCs tend to have the smoothest experience, as US banks are most familiar with these entities.

Will forming in a no-income-tax state save me money on US taxes? Not if you have no US-sourced income. State income tax only applies to income sourced to that state. Your federal obligations are identical regardless of formation state. The real savings come from lower annual fees and simpler ongoing compliance.

What happens if I do not file Form 5472? The IRS assesses a US$25,000 penalty per form, per year. This is not theoretical: the IRS actively enforces this requirement against foreign-owned single-member LLCs. Budget for professional tax preparation from year one.

The right formation state is the one that matches your actual needs, not the one with the best marketing. For most non-residents, that means Wyoming or New Mexico, with Delaware reserved for those who genuinely need its legal infrastructure. Whichever state you choose, the federal compliance requirements remain the same, and getting those right matters far more than the state name on your Articles of Organisation. If you are unsure where to start, Cosmos can help you work through the decision and connect you with the right professionals to keep your LLC compliant from day one.

This is general information, not tax, legal or accounting advice. Rules differ by country and change frequently; confirm your position with a qualified adviser in the relevant jurisdiction before acting.