Wyoming, Delaware and Florida are among the states that do not have a state income tax, but the best state to start an llc in Usa should not burden you with annual expenses as well as tax advantages.
Different types of questions come from many entrepreneurs. The questions most asked by most people planning to form a new LLC company in Usa are;
- Which is the best state to start an llc in Usa?
- Does your accountant know the state where you will form an llc?
- Which state does not have an in-state income tax?
- Which state is the cheapest in terms of annual costs?
As a result of the answers to these questions, the best state to form an llc in Usa emerges. Let's answer the questions from the beginning to the end, so we will answer the main question in the topic.
Which state is the cheapest in terms of annual costs?
If we do not include tax situations, the state that does not cost you anything in terms of annual expenses is the state that does not have annual filing, reporting or franchise payments. In this case, we can say that New Mexico is the least expensive state because there is no annual report or franchise tax in the state of New Mexico, so you do not need to pay the state every year to keep your company active.
No state income tax?
This issue has been brought up many times, but state income tax and other taxes vary depending on the status of the person doing the business. So this situation is not related to the state election and there is no clear answer.
You may or may not pay taxes as a result of situations such as income source (inside/outside the USA), number of LLC company members, physical ownership in the USA, shop, office, warehouse, citizenship status, salaried employee/worker affiliated with the company, turnover amount.
If everything looks in your favor and you have a tax-free state, you won't pay in-state income tax in any state anyway. In this case, you must submit an income/expense report by filing form 5472 with the US Internal Revenue Service every year, other than that, you do not need to do anything extra.
On the other hand, if you use virtual POS payment gateways such as Stripe and collect payments from credit cards, they can automatically send you a form called 1099K when you exceed a certain turnover or depending on the geography in which you sell. Receiving this form means Stripe will report you to the IRS. If you have received this form, contact an accountant to show the form to him and get help on what needs to be done. If you are actively receiving payments through Stripe, there is a possibility that you will receive 1099K depending on your income range, but do not worry if this form was not sent to you.
Note: If you have active trading volume on other platforms instead of Stripe and have opened an account with your EIN number there (Amazon, Etsy, Ebay, etc.), you may receive the same notification there as well. Under these circumstances, the action to be taken will again be to consult an accountant.
To summarize this step, it does not matter whether there is a state income tax in the selected region or not, it is your situation and the way you do business that matters. So, the absence of a state income tax does not mean that the state where the company is incorporated is the best option.
Which state has no income tax?
If you have a warehouse, office or physical location within the state, then you may be subject to state income tax and other taxes. So it makes sense to choose a location with no state income tax.
The following 4 states are among the most popular states for foreigners to form an llc, with no income tax;
- wyoming
- Delaware (If you do not have a physical location)
- Florida
- Nevada
There are also states such as Alaska and Tennessee that do not have income tax, but forming an llc as a foreigner in these states requires more procedures than others.
Does your accountant know the state where you will form an llc?
If your situation requires paying taxes, you need to get service from an accountant. However, at this stage, you need to know whether the accountant you will receive service from is familiar with the laws or tax regulations of the state you have chosen. Not every accountant can master every state because it is said that there are differences in legislation in all 50 states.
For this reason, when choosing a state, you should question from the very beginning whether your accountant is familiar with this state.
Since Wyoming is one of the top states where foreigners do business, it is possible to find many accountants who can do the taxation of your business in this state. If your business or situation requires you to pay federal taxes to the IRS and you have no idea which state to choose, your best option would be Wyoming.
Which is the best state to start an llc in Usa?
When we come to the end of the topic, the answer you hear most has not changed. The best state to form an llc in Usa varies depending on your situation. However, if you do not want to research too much or if you are completely lost on the internet while researching, you can choose the state of Wyoming without getting confused any further.
On the other hand, if you know what you are doing, you can consider different options.
For example, if you are only doing entry-level e-commerce (digital products, services, software, consultancy, etc.) on the internet, if your turnover is at normal levels, if you do not sell to the USA, if you do not have any active ties in the USA, if a tax-payable situation is not triggered, you will have no annual expenses. The state of New Mexico may be a good choice for you.
Because with a filing fee of only $50, you can establish your company in this state with the Northwest agency, including the address, in the coming years, annual filing to the state, franchise fee, etc. You won't make any payments like this.
26 Comments . New Comment
Hello,
your site is incredibly informative. On YouTube, everything is neat and tidy instead of missing pieces of information here and there.
Thank you very much for this.
However, we still have a question, sorry.
Currently, I have my own sole proprietorship in Türkiye and I pay my taxes. I have an ETSY store that I opened based on this company and I sell. But I want to expand these businesses and establish a company in America.
I want to open accounts and sell on Amazon, ETSY and other American-based online digital product sales or POD sites. For now, my goal is the American market. I think long term, so we may sell to Europe and other countries later.
I have no physical ties to America.
I will only do business on digital product sales and POD sales.
In this case, should I set up in Wyoming or New Mexico, which is most suitable for me?
Is it necessary to have a domain in the name of the company? I haven't set up a site on this business yet.
Maybe I can set up a website to represent the company in the future, but I don't have one right now.
My other issue is, my annual expenses are like this, right?
Annual Expenses: Accountant ($500) + Phone ($20) + Registered Agent fee ($125) + If it is Wyoming, annual state filing fee ($50) + If it is New Mexico, there is no filing fee, but I guess there will be state tax?
Apart from all this, isn't it federal tax based on my earnings?
Is there anything I missed?
I hope my comment will be useful to others.
Thank you for your comment.
Wyoming is very suitable for this type of business. You do not need a site and domain in the first place, you can take care of that part in the future.
What is stated in the other pricing section is correct, the costs and tax section are exactly like this.
Hello, my purpose of forming an llc in Usa is actually to be able to use only Paypal and Stripe, to receive online reservations and payments from my customers in Europe through my existing website. Which state would be the most suitable for this and what would be the taxation and other costs?
You can choose the state of New Mexico for this type of job. The taxation part is similar in all states since you are a foreigner and it is online business.
Thank you for your response. I will use the registered agent address as the address in Northwest based on your reference. Will there be any problems with PayPal? Do I need to apply to you for EIN after the New Mexico mail box service you recommend?
Actually, there is no problem, but if you want an address with special suite numbers, Northwest offers premium mail forwarding with special suites with monthly payment in the optional items tab during the ordering phase. You can add it to the order if you want
Hello; I did a lot of research, I was thinking of New Mexico at first, but…
I want to do business such as dropshipping on Amazon,
selling on Ebay,
stripe account
wise account,
shopify
In which state do you think I should form an llc?
I don't have a passport, I may not get one,
I do not have a bank account or credit card in Turkey.
Can I open an llc in my own name using my spouse's credit card and use my spouse's credit card on all the platforms I wrote above?
Hello,
The most suitable state for these business models would be Wyoming.
We can list what you need to do as follows:
1. First of all, before establishing a wyoming LLC, get a company address with a special suite number, details are here: https://startupsole.com/15a-wyoming-posta-yonlerim-icin-adres-almak/
2. Your Wyoming address will be assigned the next day. Once the address is received, you can establish your LLC company through Northwest agent. You can complete the installation by typing your special suite address into the form fields in the business address sections.
3. Get your EIN number by taking advantage of our free eIN campaign for EIN number.
4. Your EIN number will be delivered digitally to your address in the USA within 3 weeks. You can open your bank accounts after you arrive.
Note: If you do not have a passport, you cannot open a bank account. Additionally, when opening an account, banks require you to obtain and upload an account statement from a bank in Türkiye. If you do not have an account, we recommend that you continue the whole setup through your spouse.
If you do not want to install on behalf of your spouse, use your spouse's card first. Write your own name in the name and surname section of the payment forms, do not write your spouse's name, it may not be accepted. Finally, you get your passport when needed.
Hello, I reside in Pennsylvania, is there an advantage if I form my company in another state? Thanks
Hello, if you form an llc in another state, a foreign LLC will be formed and double taxation will occur. It will be in your interest to form an llc in your region of residence.
I will form an llc based on online education processes. 90% of my customer portfolio will be from countries outside Usa, and 10% will be from within Usa. In addition, the company to be formed has a plan to receive investments in the future. In this context, in which two states would you recommend forming an llc in terms of criteria such as state tax, federal tax, reporting and the most appropriate company formation, etc.
Hello,
New Mexico is generally preferred for this type of work. A state with no annual reporting and no annual state fee. However, if you are planning to get an investment, you can choose Delaware because the funding platforms generally look more favorably on Delaware companies. If there is no way to get an investment, we recommend New Mexico. We can say that federal taxes and other procedures are the same in every state for foreigners.
Hello, I am currently selling digital services with a volume of 15-20 thousand dollars annually through my company in Turkey, and it is not clear to which country the sales will be made, so there are also sales within the USA (approximately 2-3 thousand dollars of this comes from sales within the USA), since Wise has stopped its services in Turkey, the company is in the USA. I want to set up and continue receiving payments with a corporate wise account. Which state would you recommend for this?
We can say that New Mexico is the best state for digital service and product sales. There is no annual reporting and no state fees. Foreign LLCs work the same way in all states in terms of taxes. There is no state tax. If it is, you have to file a federal tax return. Considering that all states are the same, it would make sense to choose states that offer ease of maintenance with low annual costs, for example New Mexico.
Thank you sir, I will make a purchase from your reference with Northwest soon. How many days on average can I get the EIN number for the state of New Mexico in this period of the year?
You're welcome
Entity numbers are assigned by the IRS, regardless of state. Lately it's been around 2 weeks to a maximum of 4 weeks. Sometimes, as a surprise, it comes earlier.
Thank you again for the information you provided, I just made the installation, but I did not add LLC to the end of the company name. Is this a problem that could cause problems?
No problem, Northwest agent account experts automatically add LLC to the end of the company name during installation.
We wish you good luck.
Hello ; We want to form an llc based on human resources in Usa. No citizenship. The most suitable state? city?
The states of Wyoming or New Mexico may be suitable, but if the company you will form has plans to receive investments or sell the company in the future, we can also recommend the state of Delaware.
Hello,
in your opinion, which state would be the right place to open a seller account on Amazon (there will be no physical warehouse, office, etc.)?
Thank you.
Hello, definitely choose Wyoming. You can keep your account in compliance by getting a Wyoming business address with special suites from Wyomingmailforwarding.com
Hello,
we have a work plan focusing on exports from the USA, we will export specific products produced in the USA to non-American countries, we will need interim storage even if we are not physically there, which state would be the most suitable, and is there any support, tax advantages, etc. from the USA regarding exports from the USA?
Thanks for your efforts…
If you won't have a physical location in the United States, a dedicated warehouse, office, or similar situation, Wyoming may make sense. If you will have a physical location in the USA that will give you an effective nexus (ECI), then it would make sense to form the company in that state.
It is very unlikely that you will be accepted to an export support or similar grant program as a foreigner, especially if you do not have a certain physical location there. We can say that it is impossible to benefit from grants as a foreigner.
Regarding taxes, as we always say, the situation varies depending on your situation. Since you will be forming a single-member LLC as a foreigner, the state does not really matter. However, since your business is related to exports, you may need to get tax support from an expert. Or, if your business starts to reach a certain level, you can hire a consultant and receive tax declaration services.
1- Hello, I will be micro-exporting to America, I will ship the products I produce from Turkey to America. In this case, in which state would it make sense to establish a company?
2- Am I a taxpayer in America in the micro export sales model from Turkey to America and do I need to work with an accountant?
1. Wyoming may make sense, your annual expenses will be reasonable.
2. Since your income will come from Usan citizens, you will have economic ties in the USA. Therefore, depending on your workload and turnover, you may need to work with an accounting company there in the future.