Best States to Form an LLC
There is no single best state for every LLC; the right answer depends on verified fees and taxes compared against where you actually do business. By filing fee, Montana is lowest at $35. By ongoing cost, Arizona, Delaware, Missouri, New Mexico, Ohio, and South Carolina charge no periodic report fee. For most owners, forming in your home state still costs less overall than forming elsewhere and registering there anyway.
By LLC Register · Last reviewed October 1, 2026
Comprehensive Guide
How This Ranking Works
"Best" is not a single number. This guide ranks states by three verified, separate facts pulled from each state's filing agency: the one-time Articles of Organization fee, the recurring annual or biennial report fee, and whether a flat franchise or privilege tax applies on top. It does not rank states by reputation, business-friendliness surveys, or court systems, since those are not costs you can verify in dollars.
States With the Lowest One-Time Filing Fees
As of late September 2026, Montana charges the lowest Articles of Organization fee in the country at $35, according to the Montana Secretary of State. Kentucky is next at $40. A group of states cluster around $50, including Arizona, Arkansas, Colorado, Hawaii, Iowa, Michigan, Mississippi, Missouri, and New Mexico.
| State | Filing Fee | Periodic Report Fee |
|---|---|---|
| Montana | $35 | $0 (if filed by April 15) |
| Kentucky | $40 | $15 a year |
| Arizona | $50 | None required |
| New Mexico | $50 | None required |
| Missouri | $50 | None required |
States With No Periodic Report Fee
Six states don't require a recurring annual or biennial report filing at all: Arizona, Delaware, Missouri, New Mexico, Ohio, and South Carolina. That removes one recurring cost other states charge every year or two. Delaware is the exception worth knowing: although it skips the report filing itself, it still charges every LLC a flat $400 annual LLC tax, due by June 1 each year, according to the Delaware Division of Corporations.
States With No State Income Tax on LLC Profits
Seven states charge no state individual or corporate income tax at all, so a default pass-through LLC's profits aren't taxed again once they reach the members' personal returns: Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. Two other states, New Hampshire and Tennessee, are sometimes grouped with these because they don't tax wages, but each still taxes business profits directly at the entity level, so they don't belong on a "no tax" list for an LLC.
Why Your Home State Is Usually the Best State Anyway
A state with a low filing fee or no income tax only helps if you actually operate there. If you live and do business in one state but form your LLC in a different one, most states require you to register that LLC as a "foreign LLC" in your home state before you can legally do business there. That means paying a second filing fee, maintaining a second registered agent, and often filing two sets of annual reports, which usually erases any savings from the other state's lower fee. For most small business owners, forming in the state where you actually live and work is simpler and cheaper than chasing a lower sticker price elsewhere.
A Composite Look at the Leanest States
If you combine a low one-time fee, no periodic report fee, and no state income tax, no single state wins on all three counts among the ones checked here. Wyoming comes closest for owners focused on tax exposure: no state income tax, a $100 filing fee, and a $60 annual report fee (or two-tenths of a mill on Wyoming assets, whichever is greater), according to the Wyoming Secretary of State. Montana wins on the lowest sticker price. Which one is "best" depends on whether your priority is the smallest upfront fee, the smallest recurring fee, or no state income tax reaching your profits, and whether you'll actually be operating in that state.
Practical Considerations
This Is a Fee Comparison, Not Legal Advice on Where to Incorporate
This guide compares verified, published fees and tax rules. It is not a recommendation to form your LLC in any particular state, and it is not tax advice. Whether a given state's rules benefit your specific business depends on where you live, where you operate, and how you're taxed; talk to a tax professional before choosing a formation state for reasons beyond simple cost.
Delaware and Nevada's Reputation Can Outpace the Actual Savings
Delaware and Nevada are often marketed as business-friendly states, and both do have real features: Delaware's well-developed business court (the Court of Chancery) and Nevada's lack of a state income tax. But neither is free. Delaware charges a flat $400 annual LLC tax regardless of income, and Nevada requires a $200 State Business License on top of its $150 Annual List fee, due every year. If you don't operate in either state, you'll likely also pay to register as a foreign LLC back in the state where you actually do business.
Match the State to Where You Actually Operate
Before picking a state for its fee schedule, check whether your business has a physical presence, employees, or customers in your home state already. If so, you generally need to register there regardless of where you first form the LLC, which means the "cheap" state's low fee becomes an additional cost layered on top of your home state's requirements, not a replacement for them.
Fees and Tax Rules Change
Filing fees, report fees, and franchise taxes are set by each state and can change from year to year. Confirm the current fee on the state's own Secretary of State or filing agency website before you file, since the figures here reflect what each state published as of late September 2026.
Sources
The official sources used for this article.
Montana Secretary of State: Business filing fees | sosmt.gov/business/fees |
|---|---|
Kentucky Secretary of State: Business filing fees | sos.ky.gov/bus/business-filings/Pages/Fees.aspx |
Delaware Division of Corporations: Fee schedule | corpfiles.delaware.gov/Fee_Schedule/AugustFee2026.pdf |
Nevada Secretary of State: Business filings | nvsos.gov/sos/businesses |
Ohio Secretary of State: Businesses | ohiosos.gov/businesses |
SBA: Choose a business structure | sba.gov/business-guide/launch-your-business/choose-business-structure |
Created by: LLC RegisterLast reviewed October 1, 2026
Updated: October 1, 2026
Frequently Asked Questions
Is Delaware the best state to form an LLC?
Not automatically. Delaware has no periodic report filing, but it charges every LLC a flat $400 annual tax regardless of income, according to the Delaware Division of Corporations. For an LLC that doesn't operate in Delaware, that cost comes on top of registering as a foreign LLC in the state where the business actually operates.
Do states with no income tax always save LLC owners money?
Not necessarily. Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming charge no state income tax that reaches LLC profits, but some of these states charge other fees instead, such as Nevada's $200 annual State Business License. The total cost depends on every fee a state charges, not income tax alone.
Can I form my LLC in a cheaper state than the one I live in?
You can, but it rarely saves money. Most states require an LLC doing business there to register as a foreign LLC if it was formed elsewhere, which adds a second filing fee and a second registered agent requirement in your home state, on top of whatever you paid in the state you chose for its lower fee.
Which states have no annual report requirement for LLCs?
Arizona, Delaware, Missouri, New Mexico, Ohio, and South Carolina don't require a periodic annual or biennial report filing for LLCs. Delaware is the exception to watch: it still charges a flat $400 annual LLC tax in place of a report filing.
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