LLC by State Comparison

LLC by state comparison

When deciding where to form your LLC, it’s important to consider the state’s tax requirements, fees, and annual reporting obligations. You also want to consider your location if you work away from home and need flexibility regarding where you do business.

One standout state is Delaware, which has a unique constitutional court that solves only business cases, resulting in more efficient resolution of legal matters. It also has low initial and renewal state filing fees.


Indiana requires LLCs to pay sales tax and pay self-employment taxes for any members or managers who take profits out of the company. Speak with a local accountant and the Department of Revenue to find out more about how much you’ll need to pay in these taxes.

To help you make a wise decision about where to form your LLC, The Balance looked at state tax rates, legal environments for businesses and LLC fees when ranking each state. The states that stand out are Colorado, Montana, Nevada and New Hampshire for their low individual income tax rates and business-friendly legal environment, as well as North Carolina for its low LLC fees. You also have to consider one-time fees like LLC filing fees and recurring annual payments such as state report fees.


Montana’s fees for forming an LLC are relatively low. Its annual report fee is only $20. It also lacks many taxes that other states impose.

Naming Guidelines

The state’s naming guidelines require that your company name end with “limited liability company” or one of its abbreviations. Also, you cannot register a name that is already in use by another business entity.

You must also appoint a registered agent. This person or business should have a physical address in the state and be available during regular business hours. They will receive service of process and other legal documents for your LLC. They will then forward them to you. You can also use a business filing service like ZenBusiness or Incfile to handle the registration and other state requirements for you.


Nevada has gained a reputation as an LLC haven due to its low taxes, no personal income or franchise tax, and fast processing times. It also allows LLCs to remain anonymous in public filings, making it a popular choice for entrepreneurs seeking privacy. However, it does have a general business license fee and annual filing fees. Its corporation law makes directors and officers liable for breaches of duty unless the firm specifically removes liability in its Certificate of Incorporation. This could result in litigation, which may be mitigated by the state’s dedicated business court.

If you do business in other states, note that the other states will treat your Nevada-registered LLC as a foreign entity. Choosing the right state of incorporation can be crucial to your business’s success.

New Hampshire

New Hampshire is an attractive state for LLCs to operate in because of its lack of a sales tax. Additionally, there are no personal income taxes and the state’s legal environment is ranked highly by experts.

The State of New Hampshire requires LLCs to file annual reports and maintain an active registered agent. The registered agent must be available during business hours at a physical address in the State of New Hampshire and be capable of receiving service of process on behalf of the company.

While New Hampshire does not require LLCs to draft an operating agreement, it is recommended that they do so. This document can detail each member’s ownership interest and roles, profit allocations and percentage distributions, required voting procedures, tax responsibilities, dispute resolution processes, and more.

North Carolina

North Carolina is one of the most popular states for LLCs, and it has an excellent reputation as a business-friendly state. Its taxes are low, and it does not tax out-of-state income. It is also a very convenient location for businesses to conduct operations in.

When forming an LLC in North Carolina, it’s important to have an operating agreement in place. This document sets out how the company will be run, including policies, procedures and responsibilities of owners/managers.

Every LLC must also have a registered agent and office in the state of North Carolina. This person or entity must be available during normal business hours and accept service of process and legal documents on behalf of the company. The agent may be an individual or a domestic or foreign business entity authorized to do business in the state.