Best State to Incorporate

Michael David December 15, 2012 2
Best State to Incorporate


Shopping for a State in which to incorporate? We’ve analyzed the filing fees, privacy laws, and filing burdens for all 50 states.

…we favor low fees, low hassles and maximum privacy. Read on to learn more each state’s individual requirements and fees in our fifty state report card and pick the best state to start your business in our ultimate guide to incorporation found right here at GimmeLaw.

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Now Let’s Dig Deeper Into the Data: Top States to Incorporate (and Why)

Our Winner: Wyoming

  • $100 basic corporation filing fee
  • Pro-privacy and extremely low taxation
  • Imposes only minimal annual fee of $50
  • Most hassle-free and low expense corporation state in the nation
  • Non-profit tax research group, the Tax Foundation, voted Wyoming “the most business-friendly tax system of any state”

Strong Second: Nevada

  • $75 basic corporation filing fee
  • No information sharing agreement with the IRS
  • Minimal reporting and disclosure obligations upon owners and managers
  • Traditionally pro-privacy and low-tax
  • Nevada carries only a slightly higher ongoing cost compared to Wyoming

Strong Third: Delaware

  • $89 basic corporation filing fee
  • Great privacy protections with familiar, sensible laws
  • Best choice for owners that want to take their company all the way to Wall Street
  • Annual franchise tax can be confusing

Runner Up: Montana

  • $70 minimum corporation filing fee
  • Low taxes, fees and reporting burdens

Runner Up: Florida

  • $70 basic corporation filing fee
  • Best website and online services in the nation–it offers a searchable database of documents. Filings can be done online in seconds.

Worth Mention: New Mexico “Invisible LLC”

  • Offers “Invisible LLC” – a New Mexico LLC that does not require any public disclosure of either officers or owners–the most private LLC available in the US


The Complete 50-State Corporation Report Card

The following table is an at-a-glance summary of the favorability of various state laws. We examined the state corporation laws of all 50 states, their periodic reporting burdens, taxation burdens, filing fees in order to get a quick overview of how favorable or in the alternative–burdensome–each state’s laws are. Enjoy.

It’s our “Corporation Law State-by-State Report Card.”

State
Minimum Corporation Filing Fee
Ongoing and Periodic Filing Burden
Tax Burden Grade Notes
Alabama $40 Medium Low B+ While undistinguished as a corporate center, Alabama offers filing fees among the lowest in the nation.
Alaska $250 Low Medium C+ Positive: periodic reports are biennial, tax burden is moderate. Filing fee is well above average.
Arizona $60 Medium Medium B- Arizona offers average tax treatment and periodic reporting burdens. Filing fees are low.
Arkansas $50 Medium Medium B Filing fee is low. Tax treatment and periodic reporting burden is average.
California $100 Medium High F We give California an “F” primarily because of its absolutely brutal taxation: $800 minimum “income” tax for both C Corporations and S Corporations–the highest in the nation. California is unique in that it imposes an income tax upon companies that have no income.
Colorado $125 Medium Medium B Colorado offers average taxation and reporting burdens.
Connecticut $275 Medium Medium C+ High fees and burdensome tax earn Connecticut lackluster marks.
D C $120 Medium Medium C With Delaware so nearby, incorporation in DC is pointless.
Delaware $89 Low Medium B+ Delaware offers great privacy protections and familiar and sensible laws, but its annual franchise tax is a confusing mess. Delaware is still the best choice though for owners that want to take their company all the way to Wall Street…
Florida $70 Low Low-Medium B+ Best website and online services in the nation–it offers a searchable database of documents. Filings can be done online in seconds.
State
Minimum Corporation Filing Fee
Ongoing and Periodic Filing Burden Tax Burden Grade Notes
Georgia $100 Medium Medium B- Georgia offers average tax and reporting burdens. Fees are below average. Negative: incorporation requires pointless public notice in local newspaper.
Hawaii $50 Medium Low-Medium B- Hawaii offers inexpensive incorporation, but is too geographically isolated to be of value to most mainland businesses.
Idaho $100 Low Low-Medium B Idaho offers a no-fee annual report and below average filing fees and taxes.
Illinois $175 Medium Medium C+ Fees and annual expenses are high ($200 each year along with annual report).
Indiana $90 Low Low B Indiana offers surprisingly low fees and taxes. A great choice for local businesses. Periodic reports are biennial, not annual, a further plus.
Iowa $50 Low Medium B- Organizational fees and periodic report fees are low, but tax is fairly burdensome. Periodic reports are biennial, not annual, a further plus.
Kansas $90 Medium Medium B-  
Kentucky $50 Medium Medium B- Confusing “organization tax” must be paid at initial filing.
Louisiana $60 Medium Medium B-  
Maine $175 Medium Medium C+ Fees are unjustifiably high.
State
Minimum Corporation Filing Fee
Ongoing and Periodic Filing Burden
Tax Burden Grade Notes
Maryland $100 Medium Medium C+ Confusing additional charges must be paid at start-up.
Massachusetts $275 Medium High D+ High taxes and high fees.
Michigan $60 Medium Low B Michigan offers light taxes on small businesses. Filing fees are also quite low.
Minnesota $135 Low Low B Low taxes and a no-fee annual report make Minnesota a fairly good choice for incorporation.
Mississippi $50 Low Low B Low taxes, low fees, and a low-fee annual report make Mississippi a fairly good choice for incorporation.
Missouri $66 Medium Medium C+ Confusing regulations make Missouri a less-than-perfect choice for incorporation.
Montana $70 Low Low B+ Low taxes, fees, and reporting burdens make Montana a favorable choice for incorporation.
Nebraska $60 Medium Medium B- Annual report is confusing, taxes are low to medium.
Nevada $200 Medium Very Low A- “Initial List” of officers drives up start-up costs. Traditionally pro-privacy and low-tax, Nevada has raised its fees for annual reports.
New Hampshire $85 Medium Medium B- New Hampshire is average in many respects but forgives taxes (and filing burden) on entities earning less than $50,000 a year.
New Jersey $125 Medium High D+ NJ’s Business Services Division is a nightmare. Representatives are surly and slow. Formation is needlessly complicated.
State
Minimum Corporation Filing Fee
Ongoing and Periodic Filing Burden
Tax Burden Grade Notes
New Mexico $100 Low Low B+ New Mexico offers very attractive incorporation. But most noteworthy is its “Invisible LLC”–a NM LLC that does not require any public disclosure of either officers or owners–the most private LLC available in the US.
New York $125+ High High F We proudly give New York an “F”. New York has a taxation system that is so burdensome and complex, it borders on absurd. New York imposes a dizzying variety of separate taxes: a Maintenance Fee, a franchise tax, a license fee, an organization tax, and an income tax. Representatives are surly.
North Carolina $125 Medium Medium C+ Periodic/Annual fees are high in light of ho-hum corporation law.
North Dakota $90 Low Low B Low annual fees.
Ohio $85 Medium Medium B-  
Oklahoma $50 Low Low B Oklahoma offers low fees and relatively low taxes, but undistinguished corporation law.
Oregon $50 Low Low B Oregon offers low fees and relatively low taxes, but undistinguished corporation law.
Pennsylvania $125 Medium Medium D+ Horrible customer service–new incorporations can take up to 10 weeks to be processed.
State
Minimum Corporation Filing Fee
Ongoing and Periodic Filing Burden
Tax Burden Grade Notes
Rhode Island $150 Low-Medium Medium-High C+ Rhode Island imposes corporation taxes that are unjustifiably high.
South Carolina $135 Medium Medium B- Corporation taxation rules are somewhat confusing.
South Dakota $90 Low Low B South Dakota offers low taxes, but undistinguished corporation law.
Tennessee $100 Low Medium B Annual fees are low, but taxes can be burdensome with respect to business activity in Tennessee.
Texas $300 Low Low-Medium B- Initial fees are unjustifiably high. Residents of Texas, though, pay no state personal income tax.
Utah $52 Low Medium B Annual fee is only $10, but taxes can be burdensome with respect to business activities in Utah. A Utah LLC might be a better bet–check with your accountant.
Vermont $75 Medium Medium-High C Vermont imposes a higher-than-average income tax.
Virginia $75 Medium Medium-High C Unnecessarily burdensome annual tax based on authorized shares.
Washington $175 Low Low B Washington state, an obvious technology center, offers on-line filing conveniences. Overall, a fair state for incorporation.
State
Minimum Corporation Filing Fee
Ongoing and Periodic Filing Burden
Tax Burden Grade Notes
West Virginia $100 Medium Medium-High C+ Taxes are confusing. West Virginia imposes a franchise tax and an income tax.
Wisconsin $100 Low Medium B- Corporation taxes can be burdensome.
Wyoming $100 Low Very Low A+ Pro-privacy and extremely low taxation. Hands down the most hassle-free and low expense corporation state in the nation. For more info see our article on
Wyoming Incorporation Advantages

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2 Comments »

  1. [...] We have all seen the advertisements touting incorporation services in a particular state. These advertisements appear in media ranging from airline magazines to internet ads. Indeed, in the past thirty years, states have risen to challenge Delaware’s prominence as America’s most popular corporate haven. Specifically, Nevada and Wyoming have been most aggressive in enticing entrepreneurs and businesspersons to incorporate under their state flag. As we will see, Nevada and Wyoming have succeeded. (For our 50-state incorporation report card, read Best State for Incorporation). [...]

  2. [...] filing requirements, and of course, tax burden. (For our 50-state incorporation report card, read Best State for Incorporation). What follows are our picks for the worst states for incorporation in the nation. Please keep in [...]

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