Quick answer
If you only compare state filing and standard recurring fees, states such as Kentucky, Colorado, Arizona, Mississippi, Missouri, New Mexico, and Ohio can look inexpensive. But the cheapest state on paper is not always the cheapest state for your actual business.
For most U.S. residents, the practical answer is simple: form the LLC in the state where you live or operate unless there is a specific legal, tax, privacy, or investor reason to do otherwise.
| State | State-only baseline | Why it stands out |
|---|---|---|
| Kentucky | Low | Low formation filing estimate and modest recurring obligation. |
| Colorado | Low | Low filing estimate and inexpensive periodic report. |
| Arizona | Low | Low filing fee and no standard annual report fee in this model. |
| Mississippi | Low | Low filing fee and no standard recurring fee in this model. |
| New Mexico | Low | Low filing fee and a simple ongoing fee picture. |
Why “cheapest” can be misleading
A nonresident can often form an LLC in a different state, but that does not automatically avoid home-state obligations. If the business is operating in your home state, you may still need foreign qualification, local registration, state taxes, or a registered agent there.
That is why a $50 state filing fee can turn into a higher total cost if you must maintain two states, two registered agents, or extra annual reports.
For a local service business, freelancer, consultant, or small online business run from one state, the home state is usually the cleanest starting point. For privacy, holding companies, nonresident founders, or investor-backed startups, compare Wyoming, Delaware, and your home-state requirements before filing.
Best low-cost states to compare first
Wyoming is popular because it combines a moderate filing fee with privacy-friendly positioning and a relatively low annual license tax minimum. It is not free, but it is often a serious candidate for nonresident founders.
Colorado and New Mexico can look attractive on state fees, especially for simple companies. The tradeoff is that they may not be the best fit if your real operations, customers, office, employees, or tax footprint are elsewhere.
Arizona can be inexpensive in this model, but some LLCs may face publication requirements depending on the county. Always check state and county-specific obligations before filing.
What to include in your first-year budget
- State filing fee.
- Registered agent service, if you need one.
- Operating agreement template or attorney help.
- EIN help, if you do not want to apply directly with the IRS.
- Annual report, franchise tax, license tax, or similar recurring state fee.
- Domain, business email, and a simple web presence.
Recommended next step
Use the calculator, compare your home state against Wyoming and Delaware, then decide whether the extra complexity of forming out of state is actually worth it.