What's the best state to have a corporation in for tax purposes and savings?

What's the best state in the U.S. to have a corporation in for tax purposes and savings?

Today I Learned
June 26, 2025•7 min read

Q: What's the best state to have a corporation in for tax purposes and savings?

Alright, straight up: there’s no one-size-fits-all “best” state for setting up a corporation—it depends on your specific situation (where you live, where your customers are, your business model, etc). But here’s the real rundown—no fluff, no tax-bro jargon.

🔥 Top States for Incorporating (for Tax and Legal Benefits):

1. Wyoming – The Maverick

  • No corporate income tax

  • No personal income tax

  • Very low annual fees

  • Offers strong privacy (you can keep your name off public records)

  • Asset protection laws are among the best in the country

  • Cheap to form and maintain

✅ Best for: Online businesses, solopreneurs, holding companies, anyone wanting privacy + simplicity
❌ Watch out: If you operate in another state, you’ll still have to register as a “foreign entity” there and pay taxes anyway.

2. Delaware – The OG Favorite

  • Favored by investors, VCs, and big companies (lots of them are incorporated here)

  • Very business-friendly legal system (Chancery Court = fast, knowledgeable judges)

  • Flexible corporate structures

  • Great for C-Corps with many shareholders

✅ Best for: Startups planning to raise capital, tech companies, corporations with complex ownership
❌ Watch out: Franchise tax can be high if you issue a lot of shares. If you're not raising capital, it's overkill.

3. Nevada – The Flashy Rebel

  • No corporate or personal income tax

  • Strong privacy laws (like Wyoming)

  • Doesn’t share info with the IRS (as of now)

  • Business-friendly legal system

✅ Best for: Businesses wanting anonymity + operating outside Nevada
❌ Watch out: Higher fees than Wyoming, and reputation for shady shell companies, which can raise scrutiny from banks.

💡 Real Talk: Where Do You Actually Do Business?

If you live in, say, California or New York and think you’ll “save money” by registering in Wyoming or Delaware—not so fast.

You’ll still need to register as a foreign corporation in your home state, file taxes there, and pay local fees. And boom—now you’ve got double compliance headaches.

✅ Rule of thumb: If you’re a small business and operate mainly in your home state, incorporate there.
✅ If you’re building a remote, digital business, and privacy + tax simplicity is key, look hard at Wyoming.

🚀 Bottom Line

If you're:

  • Running a fully remote or online business

  • Wanting privacy + low taxes

  • Don’t need to raise venture capital

👉 Wyoming is king. Set up an LLC or corporation there, and you’re golden.

If you:

  • Want to raise big money

  • Expect a complex corporate structure

  • Want to signal “pro” to investors

👉 Go Delaware—especially for C-corps and tech startups.

If you:

  • Just want the simplest path and live in one state, operate there

👉 Use your home state. Adding Delaware or Wyoming won’t magically erase taxes.

🧠 Your Situation:

  • You live in California (the most tax-hungry state in the union)

  • You run online/digital businesses (which gives you freedom in where you incorporate)

  • You want low ongoing costs, legal privacy, and not to pay more taxes than you need to

  • You are not raising VC money, so you don’t need a Delaware C-Corp

So the burning question is…

Can you legally avoid California taxes by incorporating in a no-tax state like Wyoming or Nevada?

Short answer:
❌ No, not if you’re actually running the business from California.

🔥 The Reality Check (Backed by Law)

California’s Franchise Tax Board (FTB) is ruthless. If you:

  • Live in California

  • Operate your business from California

  • Manage it, take income from it, or run it remotely from California

Then California considers your business a California business—no matter where it's incorporated.
You’ll have to register it as a "foreign entity" in California, file a state tax return, and pay the $800 minimum franchise tax each year, regardless.

✅ What You Can Do Strategically

Still, there are legit reasons to incorporate in a state like Wyoming, even from California:

⚙️ Why Incorporate in Wyoming Anyway?

  • Privacy: Wyoming allows anonymous ownership (you can use a registered agent).

  • Asset Protection: Strong protection for single-member LLCs—better than CA.

  • No State Income Tax: If you move out of CA in the future, you’ll already be set up.

  • Cheap Annual Fees: ~$60/yr to maintain.

🎯 What It Gives You:

  • An LLC that’s not tied to your name publicly

  • A clean, simple corporate structure with protection

  • The option to easily relocate later to a no-tax state without starting over

  • Better legal protections for your assets than a California LLC

🔁 So Here’s the Smart Setup:

🔐 Step 1: Form a Wyoming LLC

Use a service like:

✅ Cost: About $150–$300 setup + $50–$100/year to maintain
✅ Keeps your name off the public record
✅ Setup time: Usually 1–3 business days

🌉 Step 2: Register That LLC as a Foreign Entity in California

You’re required to do this if you're managing the business from Cali.

✅ Cost: $70 filing fee + $20 Statement of Information + $800/year franchise tax
✅ Required if you live here and use your business to make money

🧾 Step 3: Get an EIN + Business Bank Account

  • Use the IRS website to get an EIN for free

  • Open a bank account in the LLC’s name (use Relay, Mercury, or Novo)

  • Keep money and records separate (no mixing funds = stronger legal protection)

🧠 Bonus: When You Can Ditch CA Altogether

If/when you move out of California:

  • Just stop renewing your foreign registration here

  • Keep your Wyoming LLC active

  • Now you're legally operating tax-free at the state level

👉 You keep the same business entity the whole time.

🚀 Final Verdict: Do This

✅ Form a Wyoming LLC
✅ Register as a foreign LLC in California (since you're currently based here)
✅ Pay the $800 CA franchise tax until you leave the state
✅ Use your Wyoming LLC to protect your identity and structure your business smartly
✅ When ready, move to Nevada, Texas, Florida, or Wyoming to finally break the CA tax chain

❓ Should You Wait to Register the LLC (or S-Corp) Until You Make Money?

🟨 Short Answer:

Yes, wait—unless you’re actively making sales, signing contracts, or putting yourself at legal risk.

🧠 Here’s Why (Real Talk):

✅ What Not Having an LLC Yet Really Means:

  • You’re operating as a sole proprietor by default.

  • That’s 100% legal.

  • You can still:

    • Invoice clients

    • Use PayPal, Stripe, Venmo Business, whatever

    • Deduct expenses (yes—even as a sole prop)

    • Market yourself and take money

💡 The IRS doesn’t care what your business is “called” — they care if you report the income. You can use your own Social Security number until you're ready for an EIN and LLC.

⚠️ When You Shouldn’t Wait to Register:

Register your LLC now if:

  • You’re about to launch ads or do anything public at scale

  • You’re signing client contracts (especially with liability or intellectual property involved)

  • You're taking payments on your own site

  • You want to open a business bank account and keep finances clean

  • You’re bringing on a partner

  • You need privacy and don’t want your real name on public deals

🟩 Real Example:

Let’s say you’ve got a GHL account, a landing page, a killer offer, and your first client is like, “Yeah I’m in, send the invoice.”

➤ That’s a great time to say, “Alright. Time to file the LLC so I can send this under a business name, get my EIN, and open a biz bank account.”

But if you’re still building the VSL, working on your Reels, tightening the pitch, and doing market research—don’t stress the structure yet.

💸 S-Corp? Definitely Not Yet.

S-Corps only make sense after you’re profiting at least $40–$50K/year, consistently. Why?

  • You have to pay yourself a salary

  • You need to run payroll

  • You’ll pay more in accounting and compliance

S-Corp is a tax optimization tool, not a starter move. So wait until the cash flow justifies it.

🎯 Final Recommendation for You:

✅ WAIT to file your Wyoming LLC until you’ve got:

  • A client ready to pay you

  • Or you’re taking public payments/contracts

✅ Run lean and legal as a sole prop until then
✅ Keep clear records of all biz income/expenses
✅ Start prepping now (name, domain, brand assets) so you can file fast when needed

If you're unsure when that moment hits—or if you want to be 100% ready to pull the trigger when a lead lands in your lap—I can prep you a “Ready to File” kit with:

  • Best Wyoming LLC filing service for you

  • EIN link + business banking suggestions

  • Basic contract template + invoice tools

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