Stanley - as I said in another thread above, be careful of one common misconception. For most businesses, you need to foreign-qualify in the state that you do business in. The definition of doing business in a state varies, but if you have a physical office or a bank account where you live, you are most definitely considered to be transacting there. In most cases, the savings you get from, say, deducting your home office, will exceed the savings you get from registering in a cheap state.

There is, however, a way to save money that most people overlook. If you don't really need liability protection (say, you are a computer consultant doing projects so your clients can't really sue you for more than the project is worth anyway) you can always go to your city hall and get a DBA (doing business as). DBA's are cheap and usually have no filing requirements. The DBA will allow you to get a business bank account, which will in turn allow you to separate your personal income/expenses from your business, thus giving you the ability to deduct expenses, etc.

Depends on where you reside. Some states have different tax/fees.