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Which state is better for non-US residents? Compare the two most popular states for US company formation and discover which one suits your business needs.
At a glance: Key differences between Delaware and Wyoming
Best for Small Businesses
Best for Larger Companies
Wyoming invented the American LLC in 1977 and offers unmatched benefits for entrepreneurs
No state income tax, no corporate income tax, no franchise tax. Wyoming has the lowest taxes in the US.
Excellent asset protection laws, especially for single-member LLCs. Strong charging order protection.
Strong privacy laws. Annual reports only require one person's name and signature.
Formation fee of $102 and annual report fee of only $65. Very cost-effective for small businesses.
Delaware is home to over 60% of Fortune 500 companies for good reasons
Specialized business court with expert judges, not juries. Established in 1792 for corporate disputes.
Flexible corporate laws for structuring corporations and board members. Custom operating agreements.
No sales tax. No state income tax for companies operating outside Delaware. Business-friendly tax laws.
Preferred by investors and venture capitalists. Well-established legal precedents for business law.
For most non-US residents and small businesses, Wyoming offers greater benefits with increased privacy, lower taxes, and significantly lower ongoing costs. Delaware is better suited for larger corporations that plan to raise capital or need complex legal structures.
Understanding how these states became business formation leaders
Wyoming created the American LLC in 1977, modeling it after the German Gesellschaft mit beschränkter Haftung (GmbH) from 1892. This makes Wyoming the original and most experienced LLC jurisdiction in the United States.
While Delaware later adopted Wyoming's LLC concept and marketed it more aggressively, Wyoming has continuously refined its laws to remain the most business-friendly state. Many Wall Street companies choose Wyoming for their LLC structures.
Wyoming's liberal Corporation Law enables companies to be established quickly with the broadest possible powers and minimal restrictions on business activities.
Delaware established its Court of Chancery in 1792, creating the foundation for its business-friendly legal system. This specialized court handles corporate disputes with expert judges rather than juries.
Over 60% of Fortune 500 companies and 90% of IPOs are incorporated in Delaware. This dominance comes from Delaware's well-developed legal precedents and investor familiarity.
Delaware copied Wyoming's LLC innovation but leveraged its existing corporate reputation and superior marketing to attract larger businesses seeking investment and planning public offerings.
See the total cost of ownership over 5 years for each state
Note: Registered agent fees vary by provider. This calculation uses our $99/year registered agent fee.
Note: Delaware requires $300 annual tax payment. No annual reports needed.
Detailed breakdown of all key factors for LLC formation
| Factor | Wyoming LLC | Delaware LLC |
|---|---|---|
| Formation Cost | $399 all-inclusive package | $399 all-inclusive package |
| Annual State Fee | $65 | $300 |
| State Income Tax | None | None (if no DE business) |
| Sales Tax | ~5% average | None |
| Annual Report Required | Yes (simple) | No |
| Privacy Protection | Excellent | Good |
| Asset Protection | Excellent | Good |
| Court System | Standard courts | Court of Chancery |
| Investor Preference | Growing acceptance | Strongly preferred |
| Best For | Small-Medium Business | Large Corporations |
Get answers to the most common questions about Delaware vs Wyoming LLCs
Wyoming invented the American LLC in 1977 and has continuously refined its laws to be the most business-friendly. It offers the lowest taxes in the US (no state income tax, no corporate tax, no franchise tax), excellent privacy protection, strong asset protection laws, and the lowest ongoing costs with just a $65 annual fee.
Choose Delaware if you plan to raise venture capital or investor funding, as investors and VCs strongly prefer Delaware entities. Delaware is also better if you plan to convert to a C-Corporation later, need complex business structures, or run a dropshipping business (Delaware has no sales tax).
Delaware's Court of Chancery is a specialized business court established in 1792 that handles corporate disputes. Unlike other states, it uses expert judges instead of juries, ensuring knowledgeable decisions on complex business matters. This court system has created extensive legal precedents that make business law more predictable and reliable.
Both states offer good privacy protection, but Wyoming provides superior anonymity. Wyoming annual reports only require one person's name and signature, and the state has strong privacy laws. Delaware also offers privacy protection, especially when filed through a professional registered agent, but Wyoming's privacy protections are considered among the strongest in the US.
Wyoming requires an annual report filed by the first day of the anniversary month, costing $65. Delaware LLCs don't file annual reports but must pay a $300 annual Alternative Entity Tax. Both states require maintaining a registered agent and keeping corporate records, but Wyoming's requirements are generally simpler.
Federal tax treatment is the same regardless of state. Single-member LLCs are "disregarded entities" for tax purposes, meaning they're treated as sole proprietorships. Non-US residents typically need to file Form 1040NR for US-source income. Multi-member LLCs file Form 1065. The state of formation doesn't affect federal tax obligations.
Yes, you can convert your LLC from one state to another through a process called "domestication" or by forming a new LLC and transferring assets. However, this process can be complex and costly, involving legal and tax implications. It's better to choose the right state from the beginning based on your long-term business goals.
We handle the entire process for you, regardless of which state you choose. Get started today with our all-inclusive $399 package.