Choosing the best state to form your ecommerce LLC

Last updated: 11/17/2023
On this pageFor most businesses, form in your home stateCreating a foreign LLCFor online businessesFor non-US residentsConclusionPeachPay Ignite

When starting a new ecommerce business, one of the first legal steps is forming a limited liability company (LLC). But entrepreneurs face an important question — which state should I form my LLC in? There are several key factors to consider when making this decision.

For most businesses, form in your home state

The easiest option is to form your LLC in your home state where you live and operate your business. This creates a "domestic" LLC that is governed by and registered in that state. Your home state is ideal because:

  • It avoids the need to register as a foreign LLC in another state
  • You only pay state fees and meet requirements for one jurisdiction
  • You are already familiar with your home state's business laws
  • You have local access to resources like attorneys

Creating a foreign LLC

Forming your LLC in a state other than your home state creates a "foreign" LLC. This requires registering in both your home state and the foreign state, meaning:

  • Double the state filing fees
  • Double the paperwork and maintenance
  • Engaging a registered agent in the foreign state
  • Increased risk of non-compliance and tax penalties

For online businesses

Online businesses without a clear physical location have more flexibility. In this case, form your LLC in the state where you have the strongest residency ties such as:

  • Your primary residence
  • Where your driver's license is issued
  • Where you are registered to vote
  • Where you pay individual income taxes

For non-US residents

Non-US citizens can form a US LLC in any state, with Delaware, Wyoming and Nevada popular options. These states offer benefits like privacy protection and low fees.


In summary, forming a domestic LLC in your home state is simplest for most startups. But online and real estate businesses should weigh factors like physical presence and property location. Consult advisors to determine the optimal LLC state for your situation.

PeachPay Ignite

If you’re ready to start an LLC for your ecommerce business, PeachPay Ignite helps you file the paperwork and maintain compliance in a few easy steps.

PeachPay provides information about business formation, taxes, and related topics for educational purposes only. PeachPay’s content should not be construed as accounting, tax, legal or other professional advice.