📍 Where Should I Open My Business?
Best States for Tax Savings (and the Truth You Need to Know)
If you’re a YouTuber, Shopify store owner, Amazon seller, TikToker, doctor, dentist, tradesperson, or any local small business owner, you’ve probably heard that you can save money by setting up your company in a “no-tax” state like Wyoming or Nevada.
But is that really true? And does it work if you live and work in California? Let’s break down what’s smart — and what’s a costly myth.
Popular States for Business-Friendly Taxes
1️⃣ Wyoming
One of the most popular states for small business owners and online sellers:
• No personal or corporate state income tax
• Strong privacy (anonymous LLCs allowed)
• Low filing fees, simple reporting
• Great for digital businesses and holding companies
2️⃣ Nevada
Another “no-tax” state:
• No personal or corporate income tax
• Pro-business laws
• Strong privacy for owners
• Good choice for businesses that actually operate there
3️⃣ South Dakota
Often overlooked but excellent for trusts and asset protection:
• No personal or corporate income tax
• Business-friendly laws
• Strong legal protections
4️⃣ Delaware
Famous for corporations:
• Home to more than half of all Fortune 500 companies
• Flexible business laws and pro-business courts
• Great if you’re seeking investors or plan to go big
The Reality Check for Californians
This is where many freelancers, creatives, and local businesses get burned:
If you live and work in California, you still pay California taxes — even if you open an LLC in Wyoming or Nevada.
California expects you to:
✔️ Register your out-of-state company as a “foreign entity” with the CA Secretary of State
✔️ File California business tax returns every year
✔️ Pay the $800 minimum franchise tax (for LLCs & corporations)
✔️ Collect California sales tax if you sell taxable goods in California
In short, you can’t dodge California taxes just by picking another state — but the right setup can still make sense for privacy, legal protection, or multi-state operations.
When Does Out-of-State Formation Actually Make Sense?
An out-of-state entity might be a smart move if:
✔️ You plan to move to that state and run your business there full time
✔️ You operate 100% online and have no fixed business address or California nexus
✔️ You want a holding company for real estate, IP, or investments
✔️ You’re using a trust for advanced estate planning
So, Where Should You Open Your Business?
For most YouTubers, Shopify sellers, Amazon sellers, doctors, dentists, beauty salons, and tradespeople in California, your best move is often to register right here in California — then get the right structure (LLC, S-Corp, or Corporation) to minimize taxes and keep you compliant.
The wrong setup can cost you big: late fees, penalties, double taxes, or worse.
FAQ: Best States for Businesses — Answers
Q: Can I avoid California tax if I form my LLC in Wyoming?
A: No. If you live and work in California, you must report your income here, pay state taxes, and register your Wyoming LLC as a foreign entity in CA.
Q: Should I open a Delaware Corporation for my online business?
A: Maybe — if you plan to raise investors or go big, Delaware’s laws and courts are great for that. But for most small businesses, a local CA LLC or S-Corp works better.
Q: I’m an Amazon seller. Should I use Nevada or Wyoming?
A: Not unless you operate from there. Otherwise, you still owe tax where you live. Talk to us — we help many Amazon businesses set up legally while maximizing deductions.
Q: What’s the best move for a YouTuber or TikToker?
A: If you’re earning real income, you probably need an LLC or S-Corp — we’ll help you pick the right state and structure to protect your earnings and lower taxes.
Work With Trusted Local Experts
At Velin & Associates, Inc., we help YouTubers, Shopify store owners, Amazon sellers, TikTokers, filmmakers, doctors, dentists, and other local businesses build smart tax structures that work for you — not just the headlines.
Before you open an LLC anywhere, talk to us first — we’ll help you protect your money, stay compliant, and grow with confidence.
Contact Velin & Associates, Inc.:
8159 Santa Monica Blvd STE 198/200
West Hollywood, CA 90046
📞 323-902-1000
📧 dmitriy@losangelescpa.org
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Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.