the best us state for an LLC

Looking for the best state for an LLC? Compare top options for non-residents and online businesses, and see how Estonia stacks up.

The US is the world's largest economy, and for many entrepreneurs it represents an obvious place to set up a business. But if you're not based in the US, registering an LLC (limited liability company) comes with a specific question that catches a lot of founders off guard: which state?

Each state has its own rules, fees, and tax obligations – and the right answer depends on who you are and how your business operates. In this article, we look at the best states for LLC formation with a focus on non-residents and online businesses. We also compare how Estonia's e-⁠Residency programme stacks up as an alternative.

The best US states to start a business

The best US state to register a company depends on your needs. Here are some of the most popular options for foreign entrepreneurs.

Delaware

Delaware is the default choice if you plan to raise venture capital or take on US investors. Its Court of Chancery has centuries of corporate case law, and most US investors expect a Delaware entity. However, because institutional investors expect a Delaware C-Corporation rather than an LLC, you will need to convert the business structure later once you begin raising institutional funds. It is not the cheapest option, but the legal infrastructure is unmatched.

Wyoming

Wyoming is often the top pick for most non-residents and online businesses. It has low fees, strong privacy protections, no state income tax, and minimal ongoing compliance. The Tax Foundation's 2026 State Tax Competitiveness Index ranks Wyoming number one overall for business-friendly tax structures. Member names do not appear on public state records.

New Mexico

New Mexico is the lowest-cost option in the table. At $50 to form and nothing annually, it is hard to beat on price. It also allows anonymous LLCs. The trade-off is lower name recognition as a jurisdiction compared to Wyoming or Delaware.

Nevada

Nevada offers strong privacy and no state income tax, but at $425 to form and $350 per year, it costs significantly more than Wyoming for similar benefits.

Best state to form an LLC for an online business

If your business is entirely online and you have no physical presence in any US state, Wyoming is the strongest choice. You get no state income tax, strong asset protection, and low ongoing costs. New Mexico is a legitimate alternative if cost is the main priority.

If you live in a US state and run your business from there, forming in Wyoming does not help you avoid your home state's taxes. You will likely need to register as a foreign LLC in your home state anyway. Ignoring this requirement can result in penalties and back taxes. Forming out of state only makes sense if you have no meaningful business presence in any US state.

Which state is best for an LLC for non-residents?

For non-resident founders, Wyoming is a good starting point. It has low fees, strong privacy, no state income tax, and minimal annual compliance.

Delaware is worth considering if your business model requires US investment. Otherwise, the $300 annual franchise tax is an unnecessary added cost over Wyoming's $60. 

Non-residents also need to be aware of two federal requirements. You will need an Employer Identification Number (EIN) from the IRS, which can be obtained remotely but can take several weeks in the post. You will also need to appoint a registered agent with a US address in your state of formation, which typically costs between $50–$300 per year.

How the best states for an LLC compare to Estonia

While you consider the best US state to incorporate in, it’s worth looking further afield at other options too. Estonia's e-⁠Residency programme lets entrepreneurs from around the world register and run an European Union company entirely online.

Why run an international business through Estonia? 

The core advantage is the tax structure. Estonia consistently ranks as having the most competitive tax system among the 38 countries in the OECD (Organisation for Economic Co-operation and Development), ahead of the US, Canada, Australia and others. 

With an Estonian OÜ (private limited company), you pay no corporate tax on profits that stay invested in the business. Tax only applies when profits are distributed, at a competitive rate of 22%. For founders reinvesting in growth, this is a meaningful advantage over a US LLC, where for US residents federal income tax applies to profits each year regardless.

Beyond tax, the administration is fully digital. You can incorporate, sign documents, file annual reports, and manage your company entirely online using your e-⁠Residency digital ID. There are no trips to government offices, no paper forms, and no need to ever visit Estonia.

As an EU company, an Estonian OÜ also gives you access to the EU single market. That means SEPA payments, EU banking infrastructure, and the ability to do business with European clients and partners under a recognised legal framework. For businesses targeting European customers, this carries more weight than a US LLC registered in Wyoming.

How to start and run an Estonian business with e-⁠Residency

You apply for an e-⁠Residency digital ID card online. Once approved, you can register an OÜ through Estonia's company registration portal – a process that takes an average of just two hours. Everything from signing documents to filing annual reports is done digitally using your e-⁠Residency card. You never need to visit Estonia.

First-year costs are around €600, covering the state registration fee, the e-⁠Residency card (valid for five years), and a mandatory registered address and contact person service. 

OÜ vs LLC: similarities and differences  

Both structures offer limited liability protection. Both can be owned and managed entirely by non-residents. Of businesses registered by e-⁠residents in Estonia, 99% are OÜs. It is the default structure for international founders, equivalent to an LLC or a UK Ltd. 

The key differences are tax treatment and market access. A US LLC is pass-through by default, meaning profits flow to the owner and are taxed personally under US federal rules. An Estonian OÜ is a corporate entity, so profits are taxed at the company level only on distribution. For EU-facing businesses, the OÜ also carries more weight with European clients and banks.

One important point that applies to both: neither structure changes your personal tax obligations in your country of residence. When you take money out of the business, you pay income tax where you live.

LLC in the US or OÜ in Estonia: which one is best for you?

Both are legitimate, well-respected structures used by international founders. The right choice comes down to where your business operates and where you want to grow.

A US LLC could be best if:

• Your customers, clients, or operations are primarily in the US
• You need credibility with US investors or payment processors
• You want a simple pass-through tax structure with no corporate-level tax filing
• You plan to raise venture capital – in which case Delaware is the best choice

Choose an Estonian OÜ if:

• Your business is location-independent or EU-facing
• You want to defer corporate tax until you take profits out of the business
• You want a fully digital company you can manage from anywhere in the world
• You want access to EU banking, SEPA payments, and the EU single market