Which state should you form your LLC in?
Almost certainly the one you live in. Here is what forming somewhere else would actually cost you, once the part the ads leave out is counted.
US Covers all 50 US states plus Washington DC
Updated August 27, 2026
Why "form in Wyoming" is usually wrong
The advice is not a scam exactly, it is advice for a different person. It is repeated everywhere because the people repeating it are paid when you form a company, and they are paid the same whichever state you pick.
Here is the part the ads leave out. Your home state decides whether you are doing business there, and you do not get a vote. If you live in California and run your consultancy from your desk in California, California considers that business to be operating in California — regardless of which state's certificate is framed on the wall.
So you must register the Wyoming LLC as a foreign LLC in California. That means California's filing fee, California's annual reports, California's $800 franchise tax, and a registered agent in each state. You now pay both states instead of one, and file twice as much paperwork, in exchange for nothing.
"Foreign" here means out-of-state, not out-of-country. A Wyoming LLC doing business in California is a foreign LLC in California.
The comparison above is deliberately generous to the out-of-state option
The foreign registration filing fee is not included in the totals, because we have not verified that fee for all 51 jurisdictions and we do not publish numbers we have not checked. It is a real cost, usually somewhere between $50 and $800 depending on the state, and it would make the out-of-state column worse.
In other words: the out-of-state route is shown here as cheaper than it actually is, and it still loses.
When forming out of state genuinely does make sense
- You are raising venture capital. Institutional investors expect a Delaware C-corporation, and that is about corporate law and precedent, not fees. If a fund is writing you a cheque, their lawyers will tell you where to form.
- You own property in another state. Real estate is generally held in an LLC formed in the state where the property sits, because that is where the asset and the liability are.
- You genuinely have no home state nexus. Rare, and it is not the same as travelling a lot — you still have a state of residence, and that is usually where you are doing business from.
- Privacy is the actual goal. Some states do not publish member names. That is a real difference, but note you will still be registering in your home state, so it buys less anonymity than it appears to. And a registered agent keeps your home address off the record in any state.
None of those describe a freelancer, a consultant, an agency or a shop. If one of them describes you, the fee comparison above is not your deciding factor anyway.
An LLC does not reduce your federal tax
Worth restating because so much of the marketing implies otherwise. A single-member LLC is a disregarded entity federally: the same Schedule C, the same self-employment tax, an identical return to being a sole proprietor. What it buys is liability protection, which may well be worth the fees, but that is a different thing from a tax saving. What actually reduces the tax is the S-corp election, which you can model with the S-corp calculator.
About these figures
Formation and recurring fees come from the same dataset behind the LLC cost calculator and the public fee dataset, verified against state agencies rather than aggregators and compiled August 27, 2026. The registered-agent figure is a typical market price of $125 a year, not a quote. Fees change, and this is a comparison tool, not legal advice.