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When starting a Limited Liability Company (LLC), one of the first questions entrepreneurs ask is: “What’s the best state to form my business in?” While some states are known for being “business-friendly,” the reality is that the best state for most entrepreneurs is their home state.

Why Your Home State Is Usually Best

If your company primarily operates in one state — whether you run a brick-and-mortar location or an online business — forming your LLC in your home state is almost always the smartest choice.

Here’s why:

You are already legally doing business there.

Forming in another state means you’ll need to register as a foreign LLC in your home state anyway, doubling your filing costs and compliance requirements.

State fees, taxes, and annual reporting obligations will apply in whichever state you actually conduct business.

Exceptions to the Home State Rule

There are a few situations where forming outside your home state makes sense:

1. Non-U.S. Residents

If you are a non-U.S. resident looking to form an LLC, you are free to choose any state. The most popular options are:

Wyoming LLCs – Known for low filing fees, strong privacy protections, and no state income tax.

Delaware LLCs – Famous for its business-friendly legal system and Court of Chancery, making it attractive for investors and startups.

2. Real Estate LLCs

Real estate investors often form LLCs in the state where their property is located, rather than their home state. This avoids the need to register as a foreign LLC and simplifies property-related legal matters.

Special Considerations

Delaware and Nevada are often marketed as “business havens,” but unless you live or own property there, you’ll likely face higher costs by registering in multiple states.

For online businesses, forming in your home state is typically sufficient, unless you have unique tax or investment needs.

Conclusion

For most entrepreneurs, the best state to form your LLC is your home state, since that’s where you’ll be conducting business and paying taxes anyway. Exceptions include non-U.S. residents, who may benefit from Wyoming or Delaware, and real estate LLCs, where forming in the property’s state makes more sense.