What state should I form my LLC in?
Form in the state where you actually operate. Forming in Delaware or Wyoming for 'tax savings' is almost always a myth for small businesses — and triggers foreign-qualification fees.
If you're a single founder or small team operating in one state, form your LLC in that state. The 'Delaware myth' costs more than it saves for almost every small business.
The Delaware myth
Delaware is famous for its business-friendly courts, privacy, and franchise tax structure. But those benefits matter at scale — for VC-backed companies with complex cap tables and IP litigation. For a freelancer LLC or a 5-person services business, Delaware adds two real costs: (1) you'll need to register as a foreign LLC in your home state anyway (because that's where you operate), (2) you'll pay franchise tax in Delaware AND the registration fee in your home state.
When out-of-state DOES make sense
- You're raising VC money — Delaware C-Corp is required
- You're forming a holding company that owns subs in multiple states — Delaware is genuinely useful
- You're a real-estate investor with no physical operations and want privacy — Wyoming or NM
- You don't actually operate anywhere (digital nomad, online business with no nexus)
Pick your home state if
- You have a physical office, employees, or warehouse in one state
- You meet customers in person regularly in one state
- You have a bank account or merchant account tied to one state
- You're a service business (consulting, freelancing, agency)
FormifyAI files in all 50 states + DC. We don't push Delaware unless you have a clear reason for it.
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