Wyoming vs. Delaware LLC: Comparing Cost, Privacy & Legal Benefits

Choosing the right state to form your Limited Liability Company (LLC) is one of the most foundational decisions an entrepreneur can make. The state you choose impacts your business’s privacy, costs and legal protections. Among the 50 states, Wyoming and Delaware consistently emerge as top contenders due to their business-friendly climates.

While both offer significant advantages, they cater to different business needs and long-term goals. This guide provides a detailed comparison of their processes, requirements and benefits to help you decide whether to incorporate in Wyoming vs. Delaware.

Key Differences at a Glance

The primary distinctions between a Wyoming vs Delaware LLC revolve around annual costs, legal structure and taxation. While Delaware's initial filing fee is $90, it imposes a flat $300 annual franchise tax on all LLCs.¹ In contrast, Wyoming’s filing fee is $100, but its annual report fee is significantly lower, starting at a minimum of $60.¹

Legally, Delaware is renowned for its prestigious Court of Chancery, a specialized court for corporate disputes that provides legal predictability attractive to investors.² Wyoming, however, prioritizes owner privacy by not requiring members' names on public records and offers a more favorable tax climate with no state income or franchise taxes.³

Now, let's break down the advantages of each state, starting with Wyoming.

The Case for a Wyoming LLC: Privacy and Simplicity

Wyoming was the first state to establish the LLC structure, and it continues to be a haven for entrepreneurs who value privacy and minimal bureaucracy. The state offers compelling Wyoming corporation advantages.

Unmatched Privacy Protection

Wyoming is one of the few states that allows for anonymous LLC ownership. The names of LLC members and managers are not required to be listed on public formation documents.³ This level of privacy is ideal for entrepreneurs who wish to keep their business involvement discreet for personal or security reasons.

Favorable Tax Environment

Wyoming stands out for its tax-friendly policies. The state imposes no corporate income tax, personal income tax or franchise tax on LLCs.³ This straightforward tax structure can lead to significant savings and simplifies financial management, allowing you to reinvest more capital back into your business.

Lower Costs and Maintenance

The cost of forming and maintaining an LLC in Wyoming is highly competitive. After the initial $100 filing fee, the annual report fee starts at just $60.¹ This predictable, low-cost structure makes Wyoming an attractive option for small to medium-sized businesses and solopreneurs looking to keep overhead minimal. For more details, see our guide on the Wyoming LLC.

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The Case for a Delaware LLC: The Gold Standard for Investors

Delaware has built a global reputation as the premier state for incorporation, hosting over 60% of Fortune 500 companies.⁴ Its robust legal system and established precedent make it the preferred choice for businesses with ambitious growth plans.

The Prestigious Court of Chancery

Delaware's main attraction is its Court of Chancery, a specialized court that deals exclusively with corporate law.² This court, led by expert judges rather than juries, provides predictable and sophisticated rulings on complex business disputes. This legal stability is highly valued by investors, making Delaware LLCs more attractive to venture capitalists and angel investors.

Tax Advantages for Out-of-State Operations

While Delaware has a franchise tax, it offers significant Delaware LLC tax benefits for businesses that are formed there but operate elsewhere. If your Delaware LLC does not conduct business within the state, you are not required to pay state income tax.⁵ This makes it an excellent choice for international founders and U.S. entrepreneurs whose operations are based in other states.

Flexibility and Investor Appeal

The state’s well-developed body of corporate law provides a high degree of contractual freedom and flexibility in structuring your company. This, combined with its prestigious reputation, signals stability and legitimacy to potential investors, partners and clients. Learn more about the process in our article on starting a Delaware LLC.

For international entrepreneurs, the process of establishing an LLC in either state is remarkably accessible.

How to Create an LLC in Wyoming vs. Delaware as a Foreigner

Both Wyoming and Delaware are popular choices for non-U.S. residents looking to establish a presence in the American market. Neither state requires owners to be U.S. citizens or residents.

The process of creating an LLC in Wyoming vs Delaware is similar for foreigners and domestic entrepreneurs. You must choose a unique business name, appoint a registered agent with a physical address in that state, and file the formation documents, known as Articles of Organization, with the Secretary of State. Once your LLC is formed, you will need to obtain an Employer Identification Number (EIN) from the IRS to open a U.S. business bank account, hire employees and file federal taxes.

To help guide your final decision, here are answers to some final key questions to consider.

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Once you have established your business with an LLC, you’ll need a business account to manage your US finances. A Wise Business account is easy to open online and comes with no monthly fees. You can convert funds from your home currency to USD with low, transparent fees.

Wise is not a bank, but a Money Services Business (MSB) provider and a smart alternative to banks. The Wise Business account is designed with international business in mind, and makes it easy to send, hold, and manage business funds in currencies. You can get major currency account details for a one-off fee to receive overseas payments like a local. You can also send money to countries.

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Final thoughts

In short, choosing between a Wyoming LLC and a Delaware LLC depends heavily on your business goals, need for anonymity, and long-term plans. Wyoming is generally preferred for low cost, simplicity, and privacy, while Delaware is favored for its established legal precedent and appeal to investors. Be sure to understand what you need in order to make the best selection for your business.

Frequently Asked Questions

Is Delaware or Wyoming better for an LLC?

The better choice depends entirely on your business goals. Wyoming is generally better for small businesses, online entrepreneurs and holding companies that prioritize low costs and high privacy. Delaware is the superior choice for startups planning to raise venture capital, businesses involved in complex corporate transactions or any company that values its highly respected legal system.

What is the disadvantage of an LLC in Wyoming?

The primary disadvantage is that its legal framework is less familiar to out-of-state investors, which could be a hurdle when seeking funding. Additionally, while Wyoming offers strong asset protection within its borders, those protections may not be recognized in other states where you conduct business.⁶ This could necessitate registering as a foreign LLC in another state, adding costs and complexity.

What are the disadvantages of a Delaware LLC?

The main disadvantages are higher costs and increased formality. The $300 annual franchise tax is significantly more than Wyoming's annual fee.¹ Delaware also requires LLCs to obtain a state business license, which adds another layer of paperwork and associated fees.⁷

Sources:

1. Wyoming vs Delaware LLC | Rocketwave
2. A Comparative Analysis of Delaware LLCs and Wyoming LLCs | Bay Legal
3. Comparing LLCs in Wyoming and Delaware | Zen Business
4. Annual Report Statistics | Delaware.gov
5. Delaware Sales Tax and Other Reasons Why Companies Incorporate in Delaware | Indinero
6. 7 Ways Wyoming LLC Will Help You Grow And Protect Business Assets | Jiah Kim & Associates Law
7. Requirements for Delaware Businesses | Delaware.gov