Best US States for a Foreign-Owned LLC in 2026
Wyoming, Delaware, or New Mexico? We compare the three most popular states for foreign-owned LLC formation on cost, privacy, and ease of use.
Key Takeaways
- Wyoming is the best overall choice for most foreign-owned LLCs
- Delaware's $300/year franchise tax makes it expensive for simple LLCs
- New Mexico is the cheapest option with $0 annual fees
- All three states offer strong privacy — no public member disclosure
Why Your State Choice Matters
As a non-resident forming a US LLC, you can choose any state regardless of where your business operates. Since most foreign-owned LLCs operate entirely outside the US, you are essentially shopping for the best regulatory environment. The state you choose affects three things directly:
- Cost — Formation fees, annual reports, and franchise taxes vary dramatically
- Privacy — Some states publish member/manager names publicly; others do not
- Simplicity — Annual compliance requirements differ by state
Your state choice does not affect your federal tax obligations. Every foreign-owned LLC must file Form 5472 with the IRS regardless of where it is formed. State choice is about ongoing costs and privacy.
Side-by-Side Comparison
Here is how Wyoming, Delaware, and New Mexico stack up on the factors that matter most to foreign LLC owners.
| Factor | Wyoming Recommended | Delaware | New Mexico |
|---|---|---|---|
| Formation Cost | $100 | $90 | $50 |
| Annual Fee | $60/year | $300/year | $0 |
| Franchise Tax | None | $300/year (flat fee for LLCs) | None |
| Privacy | Excellent | Good | Excellent |
| Foreign Owner Friendly | Excellent | Good | Good |
Wyoming Recommended
Formation: $100
Annual Fee: $60/year
Franchise Tax: None
Privacy: Excellent
Delaware
Formation: $90
Annual Fee: $300/year
Franchise Tax: $300/year (flat fee for LLCs)
Privacy: Good
New Mexico
Formation: $50
Annual Fee: $0
Franchise Tax: None
Privacy: Excellent
Wyoming — The Top Choice for Foreign Owners
Wyoming has earned its reputation as the gold standard for foreign-owned LLCs, and for good reason. The state was the first in the US to create the LLC entity type back in 1977, and it has continued to refine its business-friendly legislation ever since.
Advantages
- No state income tax on LLC earnings
- No franchise tax — just a $60 annual report fee
- Member and manager names are not public record
- Strong asset protection with charging order protections
- No requirement for members to be US residents
- Lifetime proxy allows a nominee to manage filings
- Simple annual report — can be filed online in minutes
Considerations
- Not as prestigious as Delaware for investor-funded companies
- Registered agent required (typically $50-150/year)
For a single-member foreign-owned LLC that primarily provides services or sells digital products, Wyoming is almost always the optimal choice. The total annual cost is roughly $110-210 (annual report + registered agent), which is the lowest of any mainstream formation state.
Delaware — The Corporate Favorite
Delaware is the most famous incorporation state in the US, home to over 60% of Fortune 500 companies. However, its advantages are primarily designed for C-Corporations raising venture capital, not for single-member LLCs owned by non-residents.
Advantages
- Court of Chancery — specialized business court with experienced judges
- Well-established case law for business disputes
- Recognized and trusted worldwide by investors and banks
- No state income tax on out-of-state income
Drawbacks for Foreign LLCs
- $300/year franchise tax — regardless of revenue
- Total annual cost: ~$450-550 (franchise tax + registered agent)
- Court of Chancery advantage is irrelevant for most small LLCs
- No additional privacy over Wyoming
If you are planning to raise venture capital or bring on US-based investors, Delaware makes sense. For a straightforward foreign-owned LLC, you are paying an extra $240/year compared to Wyoming with no meaningful advantage.
New Mexico — The Budget Option
New Mexico offers the most cost-effective LLC formation in the country. With a $50 formation fee and zero annual fees, it is the cheapest state to maintain an LLC long-term.
Advantages
- Lowest formation cost — just $50
- No annual report requirement
- No annual fee or franchise tax
- Strong privacy — no member disclosure on public filings
- Only ongoing cost is your registered agent
Considerations
- Less well-known — some banks or payment processors may be less familiar
- No annual report means less oversight (could be a positive or negative)
- Fewer formation service providers specialize in NM
New Mexico is an excellent choice if your primary goal is minimizing costs. The only ongoing expense is your registered agent ($50-100/year). However, if you plan to open a US bank account, Wyoming's stronger reputation may make the process smoother.
What About Other States?
You may see Florida, Texas, or Nevada mentioned in some guides. Here is why they are generally not ideal for foreign-owned LLCs:
Florida
$125 formation + $138.75 annual report. Member names are public record. No significant advantage over Wyoming.
Nevada
$425 formation + $350 annual fee + $200 business license. Expensive with no meaningful benefit over Wyoming for foreign owners.
Texas
$300 formation fee. Has a franchise tax (though most small LLCs fall below the threshold). No privacy advantage.
Our Recommendation
For most foreign-owned LLCs, we recommend Wyoming. It offers the best combination of low cost, strong privacy, excellent asset protection, and widespread recognition. Banks, payment processors, and service providers are all very familiar with Wyoming LLCs.
Choose Delaware only if you plan to raise venture capital or need the Court of Chancery for complex business disputes.
Choose New Mexico if minimizing ongoing costs is your absolute priority and you do not need to open a US bank account immediately.
Next Steps
Once you have decided on your state, you need a formation service to file your Articles of Organization and provide a registered agent. We recommend these trusted providers:
Firstbase
All-in-one formation package including registered agent, EIN application, operating agreement, and US business address. Popular with international founders.
doola
Formation, EIN, registered agent, bookkeeping, and compliance in one platform. Excellent option if you want ongoing support beyond formation.
After formation, your next steps are: