Delaware vs Wyoming LLC: which state should you choose?

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The Delaware vs Wyoming LLC question comes up for almost every founder forming a US company without being tied to one state, including many founders outside the United States. Both states are popular, both are business-friendly, and both let you form an LLC online in days. They differ in yearly cost, privacy, legal tradition and what investors expect. This guide compares them side by side with current fees, and explains when each makes sense, and when neither does.

The short answer

For a small business or solo founder who wants a low-cost, low-maintenance US LLC, Wyoming is usually the cheaper and simpler choice. For a company that expects to raise venture capital, Delaware is the standard, though investors usually want a Delaware C corporation rather than an LLC. And if you live in, or physically operate in, a particular US state, forming in your home state is often best, because you will need to register there anyway.

The rest of this guide explains why, with the numbers.

Formation and yearly costs

From our state fee data, checked against published sources:

• Delaware: a state filing fee of $110 to form an LLC, and an annual LLC tax that rose from $300 to $400 from the 2026 tax year, due by 1 June each year.
• Wyoming: a state filing fee of $100 to form an LLC, and an annual report with a minimum fee of $60, based on assets located in Wyoming, due on the first day of your formation anniversary month.

Both states require a registered agent, which adds a yearly cost if you use a professional service. Over five years, the state fees alone for a Delaware LLC come to roughly four times those for a Wyoming LLC. See all states in our LLC cost by state table, the Delaware and Wyoming pages, and estimate the total with the LLC cost calculator.

State income tax

Wyoming has no state corporate income tax and no personal income tax. Delaware has a corporate income tax, but a single-member LLC treated as a disregarded entity, or a multi-member LLC taxed as a partnership, generally does not pay Delaware income tax itself, and Delaware does not tax income earned outside the state by non-residents in the way a founder abroad might fear. For most small LLCs with no physical activity in either state, the practical difference is the annual fee rather than income tax.

Federal tax is the same in both states. If you are a non-US founder, how your LLC is taxed federally depends on its activities and your country's treaty with the US, not the state.

Privacy

Both states allow anonymity to a degree: neither requires the names of LLC members to be listed in public formation documents. Wyoming is often described as stronger on privacy, and it has a long history of attracting founders for that reason. In practice, banks, payment processors and the IRS will still know who owns your company, and you will provide owner details when getting an EIN and opening accounts. Privacy in public records is not secrecy from regulators.

Courts and legal tradition

Delaware's main advantage is its corporate law tradition. The Court of Chancery is a specialist business court with judges, not juries, and decades of precedent, which makes outcomes more predictable for complex disputes between owners and investors. This matters most for corporations with investors, boards and complicated ownership. For a single-owner LLC, it rarely matters.

Wyoming invented the modern LLC in 1977 and has well-developed LLC law, including strong charging order protection for members. For small companies, its law is more than adequate.

Investors and fundraising

Venture capital investors overwhelmingly prefer Delaware C corporations, because their legal documents, stock option plans and processes are built around them. An LLC, whether in Delaware or Wyoming, is usually not suitable for a venture-backed startup; investors often require conversion. If you plan to raise from US venture funds or join an accelerator, consider forming a Delaware C corporation from the start. See LLC vs C corp for founders abroad.

Banking and payment processors

Banks and payment processors accept LLCs from both states. Your state of formation matters much less than having an EIN, proper documents, and a clear business profile. Some fintech banks focus on startups and accept non-US founders; see how to open a US business bank account from abroad and compare Mercury vs Wise Business and Mercury vs Airwallex.

Foreign qualification: the hidden cost

If your LLC does business in a state other than where it was formed, such as having an office or employees there, you usually must register as a "foreign LLC" in that state, paying its fees and filing its reports. A founder living in California who forms in Wyoming will likely also have to register in California and pay California's annual franchise tax, losing the advantage of Wyoming's low fees.

For founders outside the US with no physical presence in any state, this usually does not apply, which is why Wyoming and Delaware are popular with them.

For founders outside the United States

Non-US founders forming a US LLC to sell online, receive payments or work with US clients typically choose Wyoming for its low costs, or Delaware for its familiarity. Neither requires you to visit the US. You will need a registered agent in the state, an EIN, and usually a US address for mail. After formation, foreign-owned single-member LLCs have an annual federal filing, Form 5472; see Form 5472 for foreign-owned LLCs. Our full walkthrough is how to form a US LLC from abroad.

Using a formation service

Formation services file the paperwork, act as registered agent, and can help with an EIN, an operating agreement and a mailing address. They are especially useful for founders abroad. Compare them in the company formation ranking and comparisons such as Northwest vs Doola, Stripe Atlas vs Doola and Doola vs Firstbase. Current entry prices: Northwest From USD 49 + state fee, Doola From USD 297 per year + state fees, Stripe Atlas From USD 500 one-time, Firstbase From USD 99 one-time + state fee. Some services only form in specific states, so check before choosing. See how to choose a company formation service.

Annual compliance compared

Delaware LLC: pay the annual LLC tax by 1 June; Delaware LLCs do not file an annual report. Missing the payment brings a penalty plus interest, and continued non-payment can lead to loss of good standing.

Wyoming LLC: file an annual report and pay the fee by the first day of your anniversary month each year. Missing it can lead to administrative dissolution after a grace period.

In both states, keep a registered agent at all times. Federally, file required IRS returns, which depend on your ownership and tax classification. Put all deadlines in a calendar; formation services often send reminders.

Other states to consider

A few other states attract founders who are not tied to a location. New Mexico has a low filing fee and no annual report, which appeals to the cost-conscious, though some banks and processors are less familiar with it. Nevada has no state income tax but higher fees than Wyoming. Texas and Florida suit founders who live there. Our LLC cost by state table compares all of them, including New Mexico, Nevada, Texas and Florida.

Example: a freelance designer in Kenya

A designer in Nairobi with mostly US clients wants a US company to invoice as a business and access US payment tools. She has no plans to raise investment and no presence in any US state. Wyoming's low fees make it the sensible choice: about $100 to form plus a registered agent, then a modest annual report. She obtains an EIN, opens a fintech business account, and files Form 5472 each year with a pro forma Form 1120.

Example: a SaaS startup planning to raise

Two founders in Nigeria are building software and plan to apply to US accelerators and raise seed funding. They form a Delaware C corporation, not an LLC, because investors expect it and because issuing shares and stock options is straightforward. Their costs are higher, including Delaware franchise tax and corporate tax filings, but the structure avoids an expensive conversion later.

Decision checklist

1. Do you live or operate in a specific US state? If yes, consider forming there.
2. Will you raise venture capital? If yes, consider a Delaware C corporation.
3. Do you want the lowest ongoing cost for a simple LLC? Wyoming is usually cheapest of the two.
4. Do you expect complex disputes between multiple owners? Delaware's courts may be worth the cost.
5. Will your bank or processor accept your chosen state? Both are widely accepted.

Common mistakes

• Forming in Delaware or Wyoming while living in another US state, then paying two states' fees.
• Forming an LLC when investors will require a C corporation.
• Forgetting the annual tax or report deadline.
• Letting the registered agent lapse.
• Assuming state choice changes federal tax obligations.
• Missing Form 5472 as a foreign-owned single-member LLC.

Five-year cost comparison

Here is a simple five-year view of state fees alone, using current figures and ignoring registered agent and service costs:

• Delaware LLC: $110 to form, then $400 a year in annual LLC tax. Over five years, about $110 plus five annual payments of $400, roughly $2,110.
• Wyoming LLC: $100 to form, then a $60 minimum annual report fee. Over five years, about $100 plus five annual reports at $60, roughly $400.

Add a registered agent in either state, typically an annual fee from a commercial provider, and any formation or compliance service you use. The gap of about $1,700 over five years is the main financial difference for a simple LLC. For a business generating meaningful revenue, it is small; for a side project or early-stage freelancer, it matters.

Operating agreements

Neither state requires you to file an operating agreement, but both recognise them, and you should have one. An operating agreement sets out ownership, management, how profits are shared, what happens if a member leaves, and how decisions are made. Banks often ask for it when opening an account. Single-member LLCs benefit too, because the agreement helps show that the LLC is a separate entity, supporting liability protection. Formation services usually provide a template.

Getting an EIN and opening accounts

After formation in either state, apply for an Employer Identification Number from the IRS. Founders with a Social Security number can apply online instantly; founders abroad usually apply with Form SS-4 by fax or mail, or through their formation service. See how to get an EIN without an SSN. With the EIN and formation documents, you can open a business account and connect payment processors.

Questions