Delaware
The legal infrastructure, not the tax rate
Over 1.8 million entities are registered in a state of under a million residents. The reason is not tax (Delaware has both corporate and personal income tax) but legal infrastructure. The DGCL and the Delaware LLC Act are the most frequently updated and most heavily litigated business statutes in the world.
Established in 1792, the Court of Chancery resolves business disputes before judges instead of juries, drawing from specialist expertise and two centuries of precedent that underpin nearly any imaginable legal question. Every VC-backed startup, IPO candidate and major M&A transaction defaults to this court.
Costs: $110 to form ($90 filing plus $20 certified copy), $100 more for 24-hour expedited service, registered agent from $50 to $300 depending on provider, and a flat $400 franchise tax due 1 June with a $200 late penalty. No annual report for LLCs.
For
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Universally accepted by US venture capital
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Deepest business case law in the English-speaking world
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Sophisticated statute allowing flexible operating agreements
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Strong standing with banks and payment processors
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Straightforward conversion to a C-corp for a priced round
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Same-day filing available
Against
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$300 a year against Wyoming's $60
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Single-member charging order protection is weaker
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Registered agent pricing runs higher
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Accidental Delaware nexus triggers state income tax
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Overkill for a solo founder with a simple LLC
Wyoming
Invented the LLC, optimised for keeping it cheap
The modern LLC was born in Wyoming in 1977, fifteen years ahead of Delaware's equivalent adoption in 1992. The state has constructed a business code centered on cost efficiency, simplicity and owner privacy with no corporate income tax, no personal income tax, no franchise tax and no inventory tax.
The Wyoming LLC Act makes the charging order the exclusive creditor remedy against a single-member LLC, protection that is not reliably available elsewhere. That makes it the default for asset-protection structures, real estate holding and single-owner operating companies.
Costs: $102 to form ($100 filing plus a $2 online fee), no expedited tier because standard processing is already one to three days, registered agent from $50 in the most competitive market in the country, and a $60 minimum annual report, or $0.0002 per dollar of Wyoming assets, whichever is greater.
State tax
None of any kind
For
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$60 a year, the lowest of any populated state
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Explicit single-member charging order protection
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No state tax of any kind
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Members never appear on public filings
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Most competitive registered agent market in the US
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Well understood by banks and fintechs
Against
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Thin case law compared with Delaware
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Not the venture default, conversion needed at Series A
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Less brand weight with enterprise buyers
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Some payment processors still favour Delaware
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Miss the annual report and the LLC is administratively dissolved
UAE & Dubai9%
Singapore17%
Estonia0% / 22%
United Kingdom25%
United States21%
Germany29.8%
Portugal21%
Turkey25%
Netherlands19-25.8%
Hong Kong8.25-16.5%
Canada9-15% fed.
Australia25-30%
France15-25%