Federal obligations — Form 5472, FBAR, income tax — are identical in all 50 states, so state choice for a non-resident is about fees, privacy, and annual paperwork: New Mexico has no annual report, Wyoming pairs low fees with strong asset-protection statutes, and Delaware's advantages mostly matter to venture-backed corporations. None of the three is objectively "best" — the right one depends on what kind of business you're running and whether outside investors are ever in the picture.
What state choice does not change
A few obligations non-resident owners worry about most aren't state questions at all:
- Form 5472 and its $25,000-per-form penalty apply to every foreign-owned single-member LLC treated as a disregarded entity, regardless of its state of formation (IRS: About Form 5472; IRS Form 5472 instructions).
- FBAR (FinCEN Form 114) applies once a US person's — including a US LLC's — foreign financial accounts exceed $10,000 in combined value at any point in the year, a federal threshold set by FinCEN with no state variation at all (FinCEN: Report of Foreign Bank and Financial Accounts).
- Whether the LLC's activity creates US income tax exposure turns on effectively connected income under federal law, not on which state's charter it operates under.
- Beneficial ownership reporting to FinCEN is currently a non-issue for any LLC formed in a US state, New Mexico, Wyoming, and Delaware included, under FinCEN's exemption for domestically formed companies (FinCEN: BOI).
State choice is a real decision — it just isn't the lever that moves any of the above. For the Form 5472 filing itself, what matters is foreign ownership and reportable transactions, full stop.
Comparison table
| New Mexico | Wyoming | Delaware | |
|---|---|---|---|
| Formation filing fee | Among the lowest of any state | Low | Moderate — somewhat higher than NM or WY, though still an ordinary business cost |
| Annual report | Not required for LLCs | Required annually, low flat fee | Not required for LLCs (Delaware corporations file one; LLCs don't) |
| Franchise tax | None | None | LLCs owe a flat annual tax instead of filing a report; Delaware's escalating franchise-tax formula applies to corporations, not LLCs |
| Member-name privacy on the public formation record | Not required on the public filing | Not required on the public filing | Not required on the public filing |
| Registered agent required | Yes | Yes | Yes |
| Best known for | Simplicity and low ongoing burden | Charging-order asset-protection statutes | The Court of Chancery and investor familiarity for C-corps |
New Mexico profile
New Mexico's defining feature is what it doesn't ask for: no annual report for LLCs, which removes an entire category of recurring paperwork and missed-deadline risk. Formation costs are low, member names generally don't appear on the public formation document, and there's no LLC franchise tax. For a solo non-resident running a straightforward operating business — consulting, e-commerce, services with no US employees — New Mexico's appeal is mostly about what you don't have to remember to do every year.
Disclosure: Caldwell Tax Services is based in New Mexico — part of why we know this state's mechanics well, though the comparison here is the same one we'd give regardless of where a client's LLC ends up.
Wyoming profile
Wyoming was one of the first states to build strong charging-order protection into its LLC statute — a mechanism that limits a member's personal creditors to a claim against distributions, rather than letting them seize LLC assets or force a sale, which matters more to owners focused on liability protection than on compliance simplicity alone. Formation and ongoing costs are low, the state has no personal or corporate income tax, and — like New Mexico — member names aren't required on the public formation record. Wyoming does require an annual report with a modest flat fee, the one recurring task New Mexico skips.
Delaware profile
Delaware's reputation is earned, but by a different entity type than the one most non-resident owners are forming. The Court of Chancery — a specialized business court with deep corporate case law — is genuinely valuable for resolving complex, high-stakes disputes among multiple investors and a board. That reputation, and the preference US venture capital funds have for it, attaches overwhelmingly to the Delaware C-corporation, not the Delaware LLC. A Delaware LLC gets a well-regarded statute and predictable courts, but not the investor-familiarity advantage that makes Delaware famous. For a solo foreign founder with no institutional investors, Delaware's extra cost buys less than its reputation suggests.
When Delaware is actually right
Delaware earns its cost when a company is genuinely headed toward US venture capital, multiple investors on a priced round, or a cap table needing standard preferred stock and option pools — and in that scenario, the real comparison usually isn't "Delaware LLC vs. New Mexico LLC" at all, but LLC vs. C-corp, with Delaware as the default state once that decision is made. Our comparison of the LLC and C-corp tradeoffs for foreign founders covers that decision directly. Absent an actual fundraising plan, choosing Delaware for an operating LLC mostly front-loads cost that a New Mexico or Wyoming LLC would let you skip.
Changing states later (domestication)
The state you pick at formation isn't permanent. Most states allow statutory domestication — moving an LLC's legal home from one state to another while keeping the same entity, EIN, and contracts intact. Where domestication isn't available, the alternative is dissolving in the original state and forming a new LLC in the new one: new formation documents, potentially a new EIN, and care taken so contracts, bank accounts, and payment processors transfer cleanly. Either path is real work, which is exactly why the initial choice matters — but it's a correctable decision, not a permanent one, if a company's needs change later.
Frequently asked questions
Does the state where my LLC is formed change my Form 5472 obligation? No. Form 5472 is a federal filing requirement, and it applies identically no matter which state issued the LLC's formation documents. A foreign-owned single-member LLC formed in New Mexico, Wyoming, Delaware, or any other state files the same Form 5472 and pro-forma Form 1120, on the same deadlines, with the same $25,000 penalty exposure for missing it. State choice affects state-level paperwork and fees, not federal filing obligations at all.
Do privacy-friendly states like Wyoming or New Mexico hide my LLC's ownership from the IRS? No, and this is a common and costly misunderstanding. Not listing a member's name on a state's public formation document only affects what the general public can see when searching state records — it does nothing to shield ownership from the IRS. The IRS obtains the foreign owner's identity directly through the EIN application and through Form 5472 itself, which requires the foreign owner's name, address, and foreign tax identification number every single year. Privacy at the state level and being unknown to the IRS are two completely different things.
Is a registered agent required no matter which state I choose? Yes. Every US state requires an LLC to maintain a registered agent — a person or company with a physical address in the state of formation who can receive legal and state correspondence — and that requirement doesn't disappear in any of the three states compared here. It's a small recurring cost in every option, and if the owner pays that fee personally on the LLC's behalf, it's itself a reportable transaction on Form 5472.
Does the state I form my LLC in determine whether I owe sales tax? No. Sales tax obligations are generally determined by where the LLC has a physical presence, inventory, employees, or enough sales activity to create economic nexus — not by the state where its formation paperwork was filed. A New Mexico LLC selling to customers in a state with economic nexus rules can owe that state's sales tax based on its own activity there, entirely separate from having no other connection to New Mexico beyond formation. The state of formation and the states where tax is actually owed are frequently two different lists.
Written by Ifetoluwase Samuel Pirisola, Managing Director of Caldwell Tax Services, LLC — July 2026. General information, not tax advice for your specific situation — state choice interacts with liability planning and your specific business plans in ways worth a real conversation. Start your intake if you're deciding where to form, or whether it's worth moving an existing LLC to a new state.
Sources: IRS: About Form 5472 · IRS Form 5472 instructions · FinCEN: Report of Foreign Bank and Financial Accounts · FinCEN: Beneficial Ownership Information · Glossary