Introduction: why the state you choose matters
When you open an LLC in the United States as a non-resident, one of the first and most important steps is choosing the state of formation. Contrary to what many people believe, you don't have to choose the state where you live or where your business operates. In fact, if you have no physical presence in the US, you can choose any state.
This decision directly affects three key aspects: annual maintenance costs, the level of privacy you have as an owner, and the legal protections you enjoy. The two most popular states among Latin American and foreign entrepreneurs are Wyoming and New Mexico.
Comparison table: Wyoming vs New Mexico
| Criterion | Wyoming | New Mexico |
|---|---|---|
| State formation fee | ~$100 USD | ~$50 USD |
| Minimum annual fee | $60 USD/year | $0 (no annual fee) |
| Annual report | Required | Not required |
| Owner privacy | High (names are not published) | Very high (not even in the records) |
| State income tax | No state income tax | No tax for non-residents |
| Registered agent (average cost) | $50–$150/year | $50–$100/year |
| Formation speed | 2–5 business days | 1–3 business days |
| International recognition | High (very well known) | Medium |
| Asset protection | Very high (charging order protection) | High |
| Approx. total first-year cost | $200–$300 USD | $100–$150 USD |
Wyoming: pros and cons
Wyoming pioneered the LLC structure in the United States (1977) and has since built one of the most business-friendly legal frameworks in the country.
Advantages of Wyoming
- World-class asset protection: Wyoming offers so-called "charging order protection," which makes it nearly impossible for a creditor to take control of your LLC or its assets in the event of a personal lawsuit.
- No state income tax: neither for individuals nor for companies.
- Robust privacy: members' names are not public in the state registry.
- International recognition: Wyoming is widely recognized and builds trust with investors, banks and international partners.
- No state inheritance tax: beneficial if you plan to pass the company on to future generations.
Disadvantages of Wyoming
- Mandatory annual fee: a minimum of $60 USD per year, plus the cost of the registered agent.
- Annual report required: you must file an Annual Report, although it is simple.
- Higher total cost: maintenance can run $150–$250 USD/year more than New Mexico.
✓ Your business has significant assets to protect
✓ You plan to raise venture capital or work with investors
✓ You want the most internationally recognized and respected LLC structure
✓ You plan to scale your company and are willing to pay the annual fee
New Mexico: pros and cons
New Mexico is relatively less well known than Wyoming or Delaware, but for foreign entrepreneurs forming their first LLC, it offers a hard-to-beat combination: maximum privacy and minimal costs.
Advantages of New Mexico
- No state annual fee: once the formation fee (~$50) is paid, there are no mandatory annual fees payable to the state.
- No annual report: there is no annual report to file with the state, which simplifies maintenance.
- Maximum privacy: New Mexico is one of the few states where the names of LLC members don't even appear in the Secretary of State's public registry.
- Low formation costs: the state fee is approximately $50 USD, the lowest among the recommended states.
- Fast formation: usually ready in 1 to 3 business days.
Disadvantages of New Mexico
- Less recognition: some banks or investors may ask why you chose New Mexico.
- Somewhat weaker asset protection: although solid, it doesn't have the same level of charging order protection as Wyoming.
- Less presence in the startup ecosystem: it is not the standard state for startups seeking investment.
✓ You are opening your first LLC and want to minimize costs
✓ You are a freelancer or consultant, or run a single-owner digital business
✓ You have no significant physical assets in the US
✓ You prioritize maximum privacy at the lowest possible cost
What about Nevada, Delaware and Florida? A brief analysis
Delaware
Delaware is the preferred state for startups looking to raise venture capital (VC). Most accelerators and investment funds in Silicon Valley require the company to be incorporated in Delaware. However, for a Latin American entrepreneur who is not seeking institutional investment, Delaware has high costs (a minimum Franchise Tax of $300/year) and more bureaucracy.
Nevada
Nevada was once the favorite for privacy and asset protection, but in recent years its costs have risen considerably: the annual fee can exceed $350 USD, and the administrative complexity is greater. Today, Wyoming outperforms it in most of the aspects that matter to non-residents.
Florida
Florida is a reasonable option if you have a physical presence in the state or clients in the Miami area. It has a formation fee of ~$125 USD and an annual report fee of $138.75 USD. However, for non-residents with no ties to Florida, New Mexico or Wyoming offer better conditions.
First LLC, tight budget, digital business: New Mexico
Asset protection, growing company: Wyoming
Startup seeking VC investment: Delaware (C-Corp or LLC)
Physical presence in Miami/Florida: Florida
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Written by
Ignacio Navarro
Ignacio Navarro is a Certified Public Accountant, founder of Start Companies and a specialist in U.S. companies for entrepreneurs, freelancers and digital businesses in Latin America. With training in international taxation and studies at UCEMA, he advises non-resident clients on forming and maintaining LLCs, opening bank accounts, invoicing, accounting and taxes. His experience combines tax strategy, compliance and practical vision for operating in the U.S. in a simple, organized and professional way.
