Delaware, Wyoming, or the state you actually operate in

The case for Delaware

Delaware's corporate law is the most developed in the country, its Court of Chancery hears business disputes without a jury and produces a body of precedent nowhere else has, and investors' standard documents assume all of it. If you are raising venture money, that ecosystem is the product you are buying, and it is a real product.

It costs more to maintain. A Delaware LLC pays a flat annual tax of $400, due on 1 June, with no annual report to file alongside it. A Delaware corporation files an annual report with a $50 fee and pays franchise tax by 1 March, and the franchise tax is where the surprises live.

The Delaware bill that frightens founders

Delaware calculates corporate franchise tax two ways and lets you pay the lower. The notice it sends you is calculated the first way, on authorised shares, which for a company that authorised ten million shares without thinking about it produces a number in five figures.

The authorised shares method charges $175 for 5,000 shares or fewer, $250 for up to 10,000, and $85 for each additional 10,000 shares or part of one. The assumed par value method instead derives a figure from your gross assets and your issued shares, and charges $400 per million of assumed par value capital, with a $400 minimum. For an early-stage company holding very little, that minimum is where it lands.

The case for Wyoming

Wyoming has no corporate or personal income tax, a light reporting regime, and an annual report license tax of $60 or two tenths of one mill per dollar of assets located and employed in Wyoming, whichever is greater. For an entity with no assets in the state, that is $60 a year.

The report is due on the first day of the entity's anniversary month, so a company formed on 15 May files by 1 May every year afterwards. Miss it and the entity is delinquent from the second day of the following month, and administratively dissolved if it stays unfiled sixty days past the due date.

Wyoming also offers more owner privacy in the public record than most states, which is a genuine draw and is frequently oversold. Privacy in a state filing is not privacy from federal reporting, from your bank's know-your-customer process, or from a court. It is privacy from a casual search.

The answer nobody sells you

If your business has a physical presence, employees, an office or inventory in a particular state, that state is usually where you should form. Registering somewhere else does not exempt you from it. You end up qualifying as a foreign entity in the state you actually operate in anyway, paying two sets of fees, filing two annual reports, and keeping two registered agents for one business.

The Delaware or Wyoming question is genuinely open only when the business has no physical footprint in any single state. That is common for remote and online businesses run from outside the country, which is why it is the right question for most of our clients, and it is rare for everybody else.

The corollary is worth stating too. Nobody selling formation services in a particular state has an incentive to tell you that a third state is the answer, which is roughly why the internet has settled on two.

What you are committing to annually

Whichever state you pick, formation is the cheap part and the part everyone quotes. Ask what the entity costs to keep alive before you choose.

• Annual report or statement of information, on the state's own schedule rather than on the tax year.
• Franchise tax, where the state charges one, on whichever calculation basis it uses.
• Registered agent, renewed yearly, in every state where the entity is registered.
• Foreign qualification in any other state where the business has a real presence, with its own fees and its own report.
• Federal filings, which do not change with the state and are usually the larger number.

Losing good standing

Miss enough of the above and the state stops treating the entity as in good standing. That is not an abstract status on a database somewhere.

A bank will decline onboarding without a current certificate. An investor's diligence stops at it. A payment processor can freeze an account over it. Reinstating an entity costs the back fees, the penalties, the interest and a reinstatement fee, and in every case we have handled it cost more than the filings would have.

Delaware charges $200 plus 1.5% interest a month on unpaid annual tax. Wyoming administratively dissolves an entity sixty days after a missed report. Neither state sends a final warning you will necessarily receive, because it goes to the registered agent, which is one more reason not to let that lapse.

Beneficial ownership reporting, as it stands now

This rule has changed more than once and a great deal of what is written about it online is out of date, so it is worth stating the current position precisely.

Under FinCEN's final rule, effective 14 August 2026, entities created in the United States and their beneficial owners are exempt from reporting beneficial ownership information under the Corporate Transparency Act. The definition of a reporting company now covers only entities formed under the law of a foreign country that have registered to do business in a U.S. state or tribal jurisdiction.

So a Delaware or Wyoming LLC formed by a non-resident is a domestic entity and is within the exemption, while a company formed in your own country and then registered to do business in a U.S. state is not, though even then U.S. persons are not reported as beneficial owners. This is exactly the kind of rule to confirm rather than assume, because it has moved twice in two years and could move again.

Before you act on this

This is general information, not advice for your particular situation. Thresholds, forms and deadlines change, several of the rules described here differ by state and by the year in question, and the figures above were checked on the date at the top of this page rather than today. Confirm the current position before you rely on any of it.

If you want the version that applies to your entity specifically, send us the details and we will tell you what you actually owe and when.