If NRA single member LLC is disregarded entity, and they do their digital work outside of US, why do people recommend to create the LLC in states with 0% tax such as Wyoming or Delaware. Are not all states 0% for these types of LLCs?
Should not the recommended states be ones with low initial fee and 0 annual fee like Arizona or Ohio or Missouri?
Wyoming and Delaware get over-hyped like crazy by some of the LLC-formation-mills. That combined with a fundamental misunderstanding about how taxes work… is likely why people recommend WY or DE even when it makes no sense at all.
Yes, Ohio would absolutely be a better choice in that situation. (and maybe Arizona or Missouri too, I’m from Ohio, and I’m too lazy to look up the fees and requirements for the other two states at the moment.)
@Maddox
Thank you for bringing clarity. Do you happen to have any relevant Ohio resources available that I can use for further research? I am new to the U.S. taxes, so the information available is quite overwhelming.
@Haru
Ohio Secretary of State business filings portal: https://bsportal.ohiosos.gov/
$99 one time fee to form an LLC or Corporation.
Which state you form the entity in doesn’t matter for taxes. (With the exception that some states call their annual fee a “franchise tax”)
What matters is where the income is sourced, not where the entity is formed. This isn’t even Ohio (or Wyoming, etc) specific.
@Maddox
Thank you.
@Maddox
Missouri: one time initial fee, under $100. No other filings ever required. VERY EASY.
Being registered in a state is usually enough to satisfy nexus requirements for a filing. The easy answer is to do Wyoming so you don’t have to figure out if you really do have that filing requirement.
@Brice
Thank you for the response. It is not as much about money as about figuring out the reality of the best state to start an LLC as a foreigner. I just want to be educated on the matter. If you happen to have some resources that I can read I would appreciate them.
“Why do people recommend” by people you just mean paper mills and YouTubers.
Thank you for the response. Yes but not only them. There were many posts regarding this issue in digitalnomad subreddit. Also, plethora of websites/blogs with articles recommending Wyoming & Delaware.
Who do I turn to for advice? Or where do I read the related tax information? I read some articles on the IRS webpage but it was about federal income tax, nothing was mentioned about different states and their tax policy.
@Haru
You can typically find information about LLC formation, including fees and requirements, by searching for “LLC Secretary of State” along with a specific state name. Each state has an official Secretary of State website that provides details.
@Ezri
Thank you.