🏢 Many business owners are tempted by states like Wyoming and Nevada because of their lower fees, no state income tax, and privacy laws. But forming your LLC in another state may not be the shortcut you think it is.

⚖️ What the IRS and States Expect

The IRS expects you to register your LLC in the state where you’re doing business. If you form your LLC in Wyoming but operate in California, you'll still need to register in California as a foreign LLC—and pay California’s annual LLC tax and filing fees. Failing to do so can result in penalties and noncompliance issues.

💵 Comparing Filing & Ongoing Fees by State

• Wyoming: $100 to file, $60 annual fee
• Nevada: $425 to file, $350 annual fee
• California: $70 to file, $800 minimum franchise tax + $20 biennial
• Arizona: $50 to file, no annual fee
• Your Home State: Check your state’s fees here.

Keep in mind that forming an LLC in a state you don’t reside or operate in means you’ll be managing two sets of fees, two filings, and double compliance tasks.

🧾 Expense Tracking and IRS Audit Protection

Use Zoho Expense to track formation costs, annual reports, and registered agent fees. Categorize them as startup or compliance expenses and store receipts in the cloud for IRS documentation. This ensures you meet IRS audit standards and can back up any deductions or legal filings.

🧠 When Forming in Wyoming or Nevada Might Make Sense

• You have no physical presence in any state (e.g., you live abroad or operate entirely online)
• Your LLC holds intellectual property or real estate and doesn’t transact in a specific state
• You want to maximize anonymity or privacy protections for ownership

📌 Final Recommendation

For most members, forming your LLC in your home state is the simplest, most IRS-compliant strategy. It reduces costs, simplifies taxes, and keeps you in good standing without added paperwork. If you still want to explore out-of-state options, consult with a Gbooks advisor to evaluate your structure and compliance risk.