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When choosing a state to form your LLC, most entrepreneurs start with their home state. But for many, especially online business owners, real estate investors, and non-U.S. residents, two powerful factors come into play: privacy and taxes.

Certain states have intentionally crafted laws to attract businesses by offering enhanced anonymity and minimal tax burdens. These “business-friendly” states allow you to form an LLC without making your personal information a matter of public record and have tax structures that can save you money.

This guide explores the top states for LLC privacy and low taxes, what their benefits really mean, and what you need to consider before forming your business out-of-state.

Understanding LLC Privacy: The “Anonymous LLC”

An “anonymous LLC” is one where the owners’ (members’) personal names are not required to be listed on the public formation documents filed with the state. This prevents your personal information from being easily searched by the general public.

However, it’s crucial to understand a recent change in federal law. The Corporate Transparency Act (CTA) now requires nearly all LLCs to report their beneficial ownership information (the real people who own and control the company) to the U.S. government’s Financial Crimes Enforcement Network (FinCEN). This information is not public, but it means true, complete anonymity is no longer possible.

The goal of forming an LLC in a privacy state today is to protect your identity from public view, not from the government.

The Top States for LLC Privacy & Low Taxes

Here are the four states renowned for their LLC benefits, each with distinct advantages and disadvantages.

1. Wyoming: The Gold Standard for Privacy and Asset Protection

Wyoming was the first state to create the LLC and remains a top contender for its powerful blend of privacy and low costs.

• Privacy: Wyoming does not require the names of LLC members or managers to be listed on public filings. This keeps your ownership private.
• Taxes: This is a major advantage. Wyoming has no state personal or corporate income tax and no franchise tax.
• Fees: The initial filing fee is affordable ($100), and the annual report fee is low (around $60).
• Bonus: Wyoming offers superior “charging order” protection, making it one of the best states for protecting your business assets from personal creditors.

2. New Mexico: The Most Affordable & Low-Maintenance Option

New Mexico has quietly become a favorite for entrepreneurs who want privacy without recurring costs.

• Privacy: Like Wyoming, New Mexico does not require member or manager information on its public Articles of Organization.
• Fees & Maintenance: This is New Mexico’s standout feature. It has a low one-time filing fee ($50) and no annual report or fee requirement. You form it once, and there are no ongoing state filings to worry about, making it the most hassle-free option.
• Taxes: There is no franchise tax for LLCs.

3. Delaware: The Choice for Venture Capital

Delaware is famous as a corporate haven, but its benefits are specific and come at a cost.

• Privacy: Delaware law only requires the name of the LLC’s organizer and registered agent on the public formation documents, keeping the members’ names private.
• Taxes: Delaware does not tax out-of-state income. However, it imposes a significant $300 flat franchise tax on every LLC, due annually. This makes it a costly choice for small businesses.
• Key Advantage: Its main benefit is the prestigious Court of Chancery, a specialized business court that is highly attractive to venture capitalists and large investors.

4. Nevada: The Popular but Pricey Option

Nevada built a reputation as a business-friendly state, but it is no longer the most cost-effective choice for privacy.

• Privacy: Nevada does not require owner information to be publicly listed.
• Taxes: It boasts no state personal or corporate income tax.
• Fees: This is the major drawback. Nevada has high initial and annual fees, including an annual business license fee and a commerce tax on gross revenue, making it one of the most expensive states to maintain an LLC.

The Critical Caveat: “Foreign Qualification”

Before you rush to form an LLC in one of these states, you must understand one crucial rule: you have to register your business in the state where you are actively conducting business.

If you form a Wyoming LLC but you live and operate your business in California, you must register your Wyoming LLC in California as a “foreign entity.” This means you will have to:

• Pay filing fees and annual fees in both states.
• Hire a registered agent in both states.
• Lose any privacy benefits in your home state, as you will be listed on its public records.

For this reason, forming an LLC in a privacy state is most beneficial for non-U.S. residents, online businesses without a physical nexus, or holding companies that don’t actively operate in another state.

Making the Right Choice for Your Business

Choosing the right state is a strategic decision. While Wyoming and New Mexico offer incredible benefits for privacy and cost, the complexities of foreign qualification mean your home state is often the most practical choice.

Navigating these regulations to find the perfect balance of privacy, cost, and compliance is key. At Empire Ecommerce, we specialize in helping entrepreneurs worldwide analyze their unique situations to choose the best state for their LLC.

Ready to form your LLC with a strategy for privacy and growth? Contact Empire Ecommerce for a free consultation and let our experts guide you.

Disclaimer

This portion of our website is for informational or educational purposes only. Empire Ecommerce is not a law firm, and the information on this website does not constitute legal advice. All statements, opinions, recommendations, and conclusions are solely the expression of the author and provided on an as-is basis. Accordingly, Empire Ecommerce is not responsible for the information and/or its accuracy or completeness. It also does not indicate any affiliation between Empire Ecommerce and any other brands, services or logos on this page.