Did you think registering your company in the U.S. would be as simple as ordering a burger? Sorry to burst the bubble, but some states have more rules than a soap opera has episodes. Today you'll meet the states that will put the most obstacles in your way if you have —or plan to have— an LLC, and how to get past them without your wallet suffering too much.
3 states that could complicate your business life
1. California: the state that charges you for existing
If you have an LLC in California, get ready to pay an annual franchise tax of $800, even if you haven't earned a single cent. Made more than $250,000? Congratulations, now you'll pay even more.
According to the U.S. Chamber of Commerce (2024), 69% of businesses consider California's taxes "excessive."
Real example: Lucas, a programmer, registered his LLC in California because he loved the idea of having a company in the state of Silicon Valley. A year later, after paying $800 just to exist plus taxes on his income, he realized the number was crazy, so he legally moved to Florida to pay much less.
How to survive in California?
- Consider other states to register your LLC (like Wyoming or Texas).
- Look into converting your LLC into an S-Corp to lower taxes.
- Strictly comply with annual reports to avoid penalties.
2. New York: expensive, mandatory publishing
If you open your LLC in New York, you must publish ads in two local newspapers for 6 weeks, and you can spend more than $1,500, especially in Manhattan.
Real example: Sofía, owner of a Colombian café in Brooklyn, nearly fainted when she saw the bill for the mandatory publishing. In the end she used the ads for local marketing: free coffee to anyone who mentioned the newspaper ad… and it worked!
How to survive in New York?
- Register your LLC in friendlier states (Wyoming or Delaware) and then get a foreign registration in NY.
- Negotiate discounts at cheaper local newspapers outside Manhattan.
- Use the publishing requirement as a chance to promote yourself.
3. Massachusetts: a headache if you're on your own
Massachusetts has strict rules and high costs, especially tough on single-member LLCs. In fact, it's the second most expensive state to operate an LLC, right behind California.
Real example: Diego, a Venezuelan freelancer in Boston, created his LLC and ended up paying more taxes and fees than ever. Then, with our guidance, he converted his LLC into an S-Corp and significantly reduced his taxes.
How to survive in Massachusetts?
- If you're a freelancer or single-owner business, consider other states first.
- Convert your LLC into an S-Corp to optimize costs and taxes.
- Always consult experts before settling here.
So, in which state should you register your LLC?
To avoid complications, many entrepreneurs choose:
- Wyoming: no state income tax and guaranteed privacy.
- Delaware: ideal for startups and tech companies, with strong legal protection.
- Florida and Texas: no state personal income tax and a great business climate.
Checklist to choose the best state
- Does your business require a physical presence in the state?
- What tax advantages are you looking for?
- What's the annual cost of registration and maintenance?
- Are there specific requirements, like mandatory publishing?
- Can you operate remotely from another state?
Conclusion
Opening an LLC in the U.S. is easy if you choose well. Before you take your first step, research, get advice and use the laws in your favor. Remember: in business, the one who prepares best wins, not the one who pays the most taxes.
Still unsure? At DISSAU we guide you step by step to choose the ideal state for your company. Check out our company formation service and don't lose money for lack of information.
