Which is better, a Wyoming LLC or a New Mexico LLC?

Wyoming and New Mexico are two of the most popular states for forming an LLC when privacy and low costs are priorities. Both states allow anonymous LLC formation, meaning member names do not appear on public filings. But they differ in costs, asset protection, and ongoing requirements. This comparison will help you decide which state is the better fit.

Wyoming vs New Mexico LLC: Quick Comparison

What Is a Wyoming LLC?

Wyoming was the first state in the nation to create the LLC structure in 1977, and it has been refining its LLC laws ever since. Today, Wyoming is considered one of the most LLC-friendly states in the country. The state has no personal or corporate income tax, no franchise tax, and strong privacy protections for LLC owners.

To form a Wyoming LLC, you file articles of organization with the Wyoming Secretary of State and pay a $100 filing fee. Member names do not appear on the articles of organization or any public filing. Only the name of the registered agent and the name and address of the organizer are listed publicly. This makes Wyoming a popular choice for business owners who value financial privacy.

Wyoming’s LLC laws also include strong asset protection. The state’s “charging order” provision limits what a creditor can do if they obtain a judgment against an LLC member. The creditor can only receive distributions that would have been made to the member anyway. They cannot seize LLC assets, force a sale, or take over management. Wyoming courts have consistently upheld this protection, even for single-member LLCs. For more details, see our Wyoming LLC guide.

What Is a New Mexico LLC?

New Mexico offers the lowest-cost LLC formation and maintenance of any state in the United States. The filing fee is just $50, and there is no annual report requirement. Once you form a New Mexico LLC, there are no ongoing fees to pay to the state (other than taxes if you earn income in New Mexico).

Like Wyoming, New Mexico does not require member names on public filings. The articles of organization list only the LLC name, registered agent, organizer, and a few other basic details. This provides a strong level of anonymity for LLC owners.

However, New Mexico does have a state income tax. The graduated rates range from 1.7% to 5.9%. If your LLC earns income in New Mexico or you are a New Mexico resident, you will owe state income tax. If you are forming a New Mexico LLC but do not live in New Mexico and do not earn income there, the state income tax generally does not apply to you. For more information, see our New Mexico LLC guide.

Key Differences Between a Wyoming and New Mexico LLC

Formation and Ongoing Costs

New Mexico is the clear winner on cost. The $50 filing fee and zero annual reports mean you can maintain a New Mexico LLC for $50 total, indefinitely. Wyoming’s $100 filing fee is still low, but the $60 annual report adds up. Over five years, a Wyoming LLC costs $400 ($100 + 5 x $60), while a New Mexico LLC costs $50.

However, both states require a registered agent with a physical address in the state. If you do not live in Wyoming or New Mexico, you will need to hire a registered agent service, which typically costs $50-$300 per year. This cost applies equally to both states and is often the largest ongoing expense.

Privacy and Anonymity

Both states offer strong privacy for LLC owners. Neither Wyoming nor New Mexico requires member or manager names on the articles of organization or any publicly filed document. Your name will not appear in the state’s online database.

Both states do require the names of the registered agent and the organizer on the formation documents. If you want maximum anonymity, you can use a formation service as the organizer and a commercial registered agent. This way, only the service company’s name appears publicly.

Asset Protection

Wyoming has significantly stronger asset protection laws. Wyoming’s LLC Act makes the charging order the exclusive remedy for a creditor of an LLC member. This means a creditor who wins a judgment against you personally cannot seize your LLC’s assets, force distributions, or take control of the LLC. They can only receive distributions that would have been made to you anyway. If no distributions are made, the creditor gets nothing from the LLC.

Wyoming explicitly extends this charging order protection to single-member LLCs, which is important because some states do not protect single-member LLCs as strongly. New Mexico does not have the same level of explicit statutory protection. While New Mexico LLCs do offer some asset protection, the state’s laws are not as clearly developed or tested in court as Wyoming’s.

Taxes

Wyoming has no state income tax at all. There is no personal income tax, no corporate income tax, and no franchise tax. This is a major advantage if you live in Wyoming or if your LLC earns income in Wyoming.

New Mexico has a state income tax with graduated rates from 1.7% to 5.9%. However, if you do not live in New Mexico and your LLC does not conduct business or earn income within New Mexico, you generally do not owe New Mexico income tax. Many business owners who form New Mexico LLCs are located in other states and use the New Mexico LLC as a holding company or for businesses that operate entirely online in their home state.

Ongoing Compliance

New Mexico is the easiest state for ongoing compliance because there is no annual report. Once you form the LLC, there are no annual filings or fees owed to the state (assuming no state income tax obligation). You simply maintain your registered agent and keep your operating agreement up to date.

Wyoming requires an annual report filed with the Secretary of State. The report is simple to file and costs $60 per year, but it is an additional task you must remember to do. If you miss the annual report, the state can administratively dissolve your LLC.

When to Choose a Wyoming LLC

Wyoming is the better choice in these situations:

• Asset protection is a priority. You want the strongest possible charging order protection for your LLC interests.
• You are a single-member LLC and want explicit statutory protection that applies to single-member entities.
• You live in Wyoming or earn income in Wyoming and want to avoid state income tax.
• You are willing to pay $60 per year for the added legal protections Wyoming offers.
• You value the long history and well-established body of LLC case law in Wyoming.
• You are a non-U.S. resident forming a U.S. LLC and want privacy plus no state income tax. See our guide for non-resident LLC formation.

When to Choose a New Mexico LLC

New Mexico is the better choice in these situations:

• Cost is your top priority. You want to spend as little as possible on formation and maintenance.
• You want to avoid annual filing requirements and the risk of administrative dissolution for missing a report.
• You are forming a holding company or a low-activity LLC that does not need strong asset protection.
• You do not live in New Mexico and will not earn income in New Mexico, so the state income tax does not affect you.
• You want a simple, set-and-forget LLC structure with minimal ongoing tasks.

Frequently Asked Questions

Do I need to live in Wyoming or New Mexico to form an LLC there?

No. You can form an LLC in any state regardless of where you live. However, if you form an LLC in a state where you do not live and then do business in your home state, you will likely need to register the LLC as a “foreign LLC” in your home state, which involves additional fees and filings.

Which state is better for an online business?

Both are good options. If you run an online business and do not have a physical presence in either state, you will generally not owe state income tax to either one (Wyoming has none, and New Mexico’s applies only to income earned in the state). Wyoming offers stronger asset protection, while New Mexico offers lower costs. Choose based on which factor is more important to you.

Can I use a Wyoming or New Mexico LLC for real estate in another state?

Yes, but the LLC will need to register as a foreign entity in the state where the property is located. Some real estate investors use Wyoming LLCs for the asset protection benefits, even when the property is in another state. However, you will need to comply with both states’ rules and fees.

How long does it take to form an LLC in each state?

Wyoming typically processes LLC filings within 1-2 business days. New Mexico generally processes filings within 3-5 business days. Both states offer expedited processing for an additional fee.

Is New Mexico really free to maintain?

The state itself charges nothing after the initial $50 filing fee. However, you still need a registered agent in New Mexico ($50-$300 per year if you hire a service), and you may have costs for maintaining your operating agreement, getting an EIN, and other standard business needs.

Does Wyoming charge an annual report fee based on LLC assets?

The standard annual report fee is $60 for LLCs with assets of $300,000 or less in Wyoming. If the LLC has assets exceeding $300,000 in Wyoming, the fee increases. However, this is based on assets located in Wyoming, not total assets. For most out-of-state LLC owners, the fee remains $60.

Can I form an LLC in both states?

Yes. Some business owners form separate LLCs in both states for different purposes. For example, you might use a Wyoming LLC as a holding company for asset protection and a New Mexico LLC for a specific business activity. However, managing multiple LLCs adds complexity and cost.

Which state is more popular for LLC formation?

Wyoming is more widely recognized as an LLC-friendly state and attracts more filings from out-of-state owners. New Mexico is a newer option that has gained popularity in recent years primarily because of its low cost and lack of annual reporting. Both are well-established options.