One Address, Thousands of Companies: The Hidden World of LLC Registration Havens
In a nondescript building on Main Street in Cheyenne, Wyoming, more than 2,000 companies claim the same suite number as their official business address.
Similarly, in Wilmington, Delaware, and Reno, Nevada, entire office buildings, shared workspaces, and modest complexes serve as the official headquarters for thousands of registered businesses.
This concentration of businesses in a few strategic locations is largely the result of state policies that make it easier and more profitable for companies to register in another state without a physical presence.
In this article, we’ll explore how this address-for-rent industry works, which states attract the most businesses, and when registering your LLC out of state makes sense — as well as when it doesn’t.
Inside America’s Address-for-Rent Industry
You may be surprised to find out that, for as little as $30 a month, companies can establish a legal address in states like Nevada, Wyoming, and Delaware — a move that to a large extent can allow them to access favorable tax laws, stronger legal protections, and greater privacy.
This practice is perfectly legal, and for many small towns, it’s become a vital source of revenue. But as thousands of businesses crowd into single buildings and P.O. boxes, you may wonder: which states are the most popular for LLC registrations, and why do they attract so many businesses?
Popular States for LLC Registrations
There are a number of states that have implemented policies to attract out-of-state businesses, though some have been more successful than others.
That said, there are four states that have, in a very real sense, pioneered the model of streamlined LLC formation and mailbox-based registrations:
Wyoming
Wyoming stands out as the birthplace of LLCs, having recognized this flexible business structure from as early as 1977.
The state imposes no corporate or individual income tax, offers an annual report fee that remains among the lowest in the nation, and provides heightened anonymity protections through its minimal public disclosure requirements.
Delaware
Delaware has earned global recognition for its specialized Court of Chancery, which focuses exclusively on corporate law and resolves business disputes without jury trials, thereby providing faster and more predictable outcomes for companies.
The state does not impose a corporate income tax on entities that operate outside its borders, and it has built a vast body of case law that clarifies governance obligations for both corporations and LLCs.
Nevada
Nevada is known for not requiring business owners to publicly disclose personal information, a practice that aligns with entrepreneurs who prioritize discretion in their operations.
The state also refrains from taxing corporate income, which can lead to lower operating expenses for companies choosing to register there.
New Mexico
New Mexico draws in LLC founders with its low registration fees and highly streamlined approach to ongoing paperwork, as there are no annual reporting requirements for most business entities.
Additionally, the state allows LLC owners to keep their ownership completely confidential and requires no franchise taxes, further strengthening its reputation as a cost-effective alternative to pricier jurisdictions.
Did you know?
The growing competition among these states to attract out-of-state businesses has led to a race to offer even more attractive benefits, pushing each jurisdiction to continuously refine its approach and outpace the others in becoming more appealing to business owners.
Virginia, for example, secured Amazon’s HQ2 by offering a $750 million incentive deal, which included tax subsidies, infrastructure improvements, and economic development grants.
Should You Use an Out of State Address for Your LLC?
On account of all the benefits we previously discussed, you may be wondering whether registering your LLC in another state is the right move for you.
Let’s take a closer look at when it makes sense — and when it doesn’t.
When Out-of-State Registration Doesn’t Sense
Generally speaking, you’ll want to register your LLC in the state where your business will “transact business” from — a decision that, in most cases, will mean your home state.
This is because there are a number of issues that could arise from registering your LLC in the “wrong” state, with the most significant being:
- Duplicate Filing and Maintenance Fees: If you register your LLC in a different state than where you operate, you will need to register as a foreign LLC in your home state. This will require you to manage two separate filings, pay double the state fees, and potentially handle multiple annual reports.
- Compliance and Penalties: Failing to register your LLC in the state where you actually do business can lead to serious consequences, including fines, interest charges, legal penalties, and even the suspension of your ability to operate.
- Tax Obligations: Forming an LLC in a state with no income tax will not exempt you from paying taxes in the state where your business will genuinely operate, meaning that any perceived tax savings will disappear.
Having said that, business operations can be complex, and there are certain situations where registering your LLC out of state may be worth it — which we’ve explored briefly below.
When Out-of-State Registration Makes Sense
Generally speaking, you should consider registering in another state if your business falls into one of the following categories:
- Online-Only Businesses: If your business will operate entirely online without a physical presence, you may explore states with lower fees or more favorable legal frameworks, though you will need to confirm that your activities will not create a tax nexus in any particular location.
- Asset-Holding Entities: If your LLC will solely hold intellectual property and/or passive investments and will not engage in day-to-day business activities, you may consider exploring states that offer stronger asset protection laws or other specialized benefits.
- Authentic Multi-State Operations: If your business will genuinely operate across multiple states, you may consider registering your LLC in a state that offers simplified multi-state compliance or more flexible business laws. That said, you’ll still be required to register as a foreign LLC in each state where your business will have a physical or operational presence.
Note: Keep in mind that even if your business falls into one of these categories, it doesn’t automatically mean this approach will work in your favor. Every business has unique operational needs, legal obligations, and long-term goals, and so what benefits one company can lead to significant complications for another.
For more information, we recommend having a look at our What Is the Best State to Form an LLC guide.
LLC Registration and Address-for-Rent FAQs
Yes, you are legally required to register your LLC in every state where you have a physical presence, employ staff, or actively conduct business.
Keep in mind that failing to register can result in fines, legal penalties, and restrictions on your ability to operate.
The best state to register your LLC is typically the one where you actively run your business and generate income from.
This is primarily because you will need to comply with that state’s tax laws and business regulations, regardless of where your LLC is officially registered.
A domestic LLC is a business entity that operates in the state where it was originally formed and registered, whereas a foreign LLC is a business that was formed in one state but operates in another.
Keep in mind that if your business expands into other states, it will need to register as a foreign LLC in each state where it has a physical presence, employees, or actively conducts business.
Yes, you can use a virtual office address for your LLC registration as long as it’s a physical street address (not a P.O. Box) and includes a registered agent service to receive legal documents.
Just remember that having an address in another state will not exempt your business from tax obligations in the state where it actually operates.