Franchise tax, privacy, case law, banking, and compliance compared - plus exactly when to choose each state for your LLC.
A Wyoming LLC costs USD 60 per year in state fees versus Delaware's USD 300 franchise tax - a 5x difference with identical liability protection. Wyoming also offers superior charging order protection for single-member LLCs and stronger default privacy. The one advantage Delaware retains is its Court of Chancery and century of precedent, which matters for venture-backed companies and complex multi-member disputes - but not for 90% of founders.
Delaware and Wyoming are the two most popular LLC jurisdictions in the United States, and by a wide margin the most chosen by non-resident international founders. Both allow 100% foreign ownership, both accept online filings, both require a registered agent in the state, and both offer excellent liability protection under modern LLC statutes.
Delaware has been the gold standard for American business formation for over a century. Two-thirds of Fortune 500 companies are incorporated there, largely because the Delaware Court of Chancery has the deepest body of business case law in the English-speaking world and resolves business disputes through judges rather than juries. This predictability is essential for venture capital, M&A, and complex corporate transactions.
Wyoming took a different path. It invented the modern LLC in 1977, and has built its business code around simplicity, low cost, and owner privacy. Wyoming does not impose state income tax, franchise tax, or inventory tax. It has the lowest LLC annual fee of any state with a real economy (USD 60) and historically the strongest charging order protection for single-member LLCs.
For the solo founder, real estate investor, freelancer, or non-resident incorporating a single-member LLC, Wyoming has become the consensus choice. For anyone planning to raise a priced venture round, Delaware remains mandatory. This guide walks through the exact breakpoints.
USD 300/yr franchise tax - Court of Chancery precedent
USD 60/yr annual fee - strong privacy, no state income tax
| Factor | Delaware LLC | Wyoming LLC |
|---|---|---|
| Formation Cost | USD 110 state fee | USD 102 state fee Winner |
| Annual State Fee | USD 300 franchise tax | USD 60 annual report Winner |
| State Corporate Income Tax | 0% for LLCs with no DE source income | 0% - no state income tax at all Winner |
| Setup Time | 1-10 days (24hr expedited for USD 100) | 1-3 days Winner |
| Foreign Ownership | 100% | 100% |
| Registered Agent Required | Yes - typical USD 125/yr | Yes - typical USD 50-125/yr Winner |
| Member Privacy (public filings) | Members not disclosed in certificate | Members not disclosed in any filing Winner |
| FinCEN BOI Reporting | Required | Required |
| Charging Order Protection | Strong for multi-member, weaker for single-member | Explicit single-member protection in statute Winner |
| Case Law Depth | Court of Chancery - 200+ years Winner | Modern but limited |
| VC / Investor Acceptance | Universal - standard for priced rounds Winner | Requires conversion to DE for Series A |
| Banking Access | Mercury, Relay, Brex, Chase | Mercury, Relay, Brex, Chase |
| Annual Report Requirement | No annual report, only franchise tax | Annual report with paid-up capital statement |
| Audit Required | No Winner | No Winner |
| Best For | VC-backed startups, multi-member, complex equity | Solo founders, real estate, holding, non-residents |
Delaware is the undisputed capital of American business formation. Over 1.8 million business entities are registered in a state with fewer than 1 million residents. The reason is not taxes - Delaware has a state corporate income tax and a personal income tax - but its legal infrastructure. The Delaware General Corporation Law (DGCL) and the Delaware Limited Liability Company Act (DLLCA) are the most frequently updated, most extensively litigated, and most predictable business statutes in the world.
The Court of Chancery, founded in 1792, handles business disputes exclusively through judges (no juries) with specialized expertise. More than 200 years of decisions provide precedent for almost every conceivable corporate dispute. This is why every major VC-backed startup, every IPO candidate, and every M&A transaction defaults to Delaware.
State formation fee: USD 110 (USD 90 filing + USD 20 certified copy). Expedited 24-hour service: USD 100 extra. Registered agent: USD 50-300 per year depending on provider (Harvard Business Services USD 50, Northwest USD 125, CSC USD 300+). Annual franchise tax: USD 300 for LLCs, due 1 June every year, with a USD 200 late penalty. No annual report is required for LLCs (corporations pay an annual report fee on top of franchise tax). Total first-year cost: roughly USD 210-460 including agent and state fees.
Delaware LLCs are pass-through entities by default under federal tax law - income flows to members who pay federal income tax on their share. Delaware itself imposes no state corporate income tax on LLCs that derive no income from Delaware sources (the overwhelming majority of Delaware LLCs owned by out-of-state or non-resident members). The USD 300 franchise tax is a flat, non-income-based fee.
Non-resident members pay federal tax only on US-source effectively connected income (ECI). If your Delaware LLC earns no ECI - as is typical for consulting, SaaS, or holding activity conducted from abroad - there is generally no US federal tax either, only the Form 1120 / 5472 disclosure for foreign-owned single-member LLCs.
Wyoming invented the LLC in 1977, a full twelve years before Delaware adopted its equivalent. Since then, Wyoming has built a business environment laser-focused on low cost, simplicity, and owner privacy. There is no state corporate income tax, no state personal income tax, no franchise tax, and no inventory tax. The state business registry is lean, electronic, and efficient.
The Wyoming LLC Act is modern and includes explicit statutory charging order protection as the exclusive remedy for a creditor of a single-member LLC - a protection not reliably available in most other states. This makes Wyoming particularly attractive for asset-protection structures, real estate holding, and single-owner operating companies.
State formation fee: USD 102 (USD 100 filing + USD 2 online convenience fee). Expedited service is not typically offered because standard processing is already 1-3 days. Registered agent: USD 50-125 per year (Wyoming has the most competitive registered agent market in the country, with dozens of providers starting at USD 50). Annual report: USD 60 minimum (or USD 0.0002 per dollar of Wyoming assets, whichever is greater). Total first-year cost: roughly USD 150-225 including agent and state fees.
Wyoming imposes zero state-level tax on LLCs or their members - no income tax, no franchise tax, no gross receipts tax. Federally, a Wyoming LLC is treated identically to a Delaware or California LLC: pass-through by default, taxed on US-source effectively connected income for non-resident members. The only Wyoming cost is the annual report fee.
Non-resident single-member LLC owners must still file IRS Form 5472 with a pro-forma Form 1120 disclosing any transactions with the foreign owner, but this is a federal reporting requirement that applies equally in every state.
Unless you are actively raising a priced round of institutional capital, there is no practical reason to pay Delaware's USD 300 franchise tax over Wyoming's USD 60. Wyoming offers equivalent liability protection, better single-member charging order defense, stronger privacy, and identical federal tax treatment. When you do reach a Series A, converting a Wyoming LLC to a Delaware C-corp is a standard USD 500-2,500 transaction that every startup lawyer has executed hundreds of times. Start in Wyoming, convert when needed.
Yes. Wyoming charges USD 60 per year for the annual report. Delaware charges USD 300 per year in LLC franchise tax. That is a 5x difference with identical liability protection. Over ten years it adds up to USD 2,400 in extra state fees for the same legal entity.
Delaware has deeper case law through the Court of Chancery, which matters for venture-backed companies and complex multi-member disputes. For single-member LLCs, real estate holding, and small businesses, Wyoming's statute and case law are sufficient and actually offer stronger explicit charging order protection.
Wyoming. It does not require the state to collect or publicly disclose member names. Delaware also allows member anonymity on the public certificate of formation. Both must comply with FinCEN beneficial ownership reporting under the Corporate Transparency Act, filed privately to FinCEN not publicly.
Yes. Both states allow 100% non-resident ownership of LLCs. You do not need a US SSN, US address, or US bank account to form. You will need an EIN from the IRS (Form SS-4 by fax or ITIN), a registered agent in the state, and a business address (usually provided by the registered agent).
Neither state materially affects banking. Your LLC's state of formation rarely matters to US banks. Mercury, Relay, and Brex accept Delaware and Wyoming LLCs equally. Traditional banks (Chase, Bank of America, Capital One) require a physical US visit regardless of state.
When you raise a priced round of venture capital. US VCs overwhelmingly prefer Delaware C-corporations for portfolio companies, and most term sheets require Delaware domicile before closing. Wyoming is excellent until Series A; at that point, conversion to a Delaware C-corp is standard and costs USD 500-2,500 in filing and legal fees.
Use our interactive tools to compare states, calculate exact annual costs, and see when Delaware's case law premium is actually worth paying.
