Delaware vs Wyoming LLC – Which State Should You Set up LLC?

Last Updated on 2 months by Komolafe Bamidele

In terms of which state is ideal for forming an LLC, Wyoming and Delaware are usually at the top.

 Wyoming provides cheap taxes, few regulations, and robust privacy safeguards; Delaware, on the other hand, offers a solid legal structure and commercial acumen.

Businesses find both states attractive, but the best option will rely on your unique requirements and goals. 

Explore and learn about the unique aspects of Delaware vs Wyoming LLC through our in-depth article. 

What is an LLC?

To choose which state to incorporate an LLC in, you need first to understand what an LLC is. 

A limited liability corporation, or LLC, is a straightforward corporate organization that functions independently of its members.

Because of the liability safeguards attached to this kind of corporation, the moniker “limited liability company” originated.

 Members of LLCs are not personally accountable for the debts, judgments, or other obligations of the firm since the LLCs are separate entities from their members.

There is no distinction between you and your business without an LLC. 

If someone has a claim against you, they will file a personal lawsuit against you instead of a commercial one.

 Even though they are never enjoyable, dealing with a lawsuit brought against your company rather than against you personally is preferable.

A C-Corp is the primary substitute for an LLC when considering incorporation in the United States.

Unlike LLCs, c-Corps are subject to extra regulatory restrictions and must pay corporation taxes on income.

 But C-Corps is perfect for founders who wish to raise money from outside investors since they can issue equity. 

Don’t miss this; How to Start an LLC for Non-US Residents – Get FREE EIN in under 5 minutes

Similarities Between Delaware vs Wyoming LLC

If you want to start a business, you might be interested in how these two states help companies work together.

Setting for doing business. 

First off, Delaware and Wyoming are well known for being business-friendly states in which to form an LLC. 

For a long time, Delaware has been known as an excellent place to live, but in recent years, Wyoming has become more popular as an easy choice.

Legal processes that are favorable

Also, these states have rules that are good for business and low company income taxes. 

There are also simplified filing steps that make registering your LLC cheaper and more accessible.

 Because of their benefits, the two places have drawn many businesses from all over the United States. 

For example, more than half of the publicly owned companies in the country and about 63% of all Fortune 500 companies have set up shop in Delaware so that their businesses can grow. 

At the same time, Wyoming is a great place to start a small business.  

Anonymous LLC 

Both Delaware vs Wyoming LLC are anonymous llc and your information is kept private. 

Differences between Delaware and Wyoming LLCs

Now that we’ve talked about the good things that both Delaware and Wyoming have in common, let’s look at the things that make them different and make them unique options:

Even though these two states offer legal protection and fair rules for registering a business, not all companies can run smoothly there. 

There are some changes that you need to know about.

Costs that the business has to pay

There is a fee to file in these states if you want to start a limited liability business.

 In Delaware, it costs $90; in Wyoming, it costs $100. There is a fixed $50 fee to make a yearly report in Wyoming, no matter how much money the business has. 

With Delaware, there are no fees to file an annual report. There is, however, a $250 tax every year.

Sometimes, you may need proof of good standing, which some banks require.

There is a fee of $175 for the long form and $50 for the short form to get this certificate in Delaware. 

Wyoming, on the other hand, gives out this ticket for free.

How much business information is kept secret

One of Wyoming’s most well-known features is its robust privacy laws, which permit anonymous LLC ownership. 

Business owners can use proxy services or special rules to keep their names secret.

Meanwhile, Delaware provides a different privacy for LLC owners. 

People usually find information about LLC members in their state’s public records.

Both states take privacy seriously, but Wyoming usually does a better job of protecting people.

 Still, the privacy of the Delaware LLC is better because it has a court system specifically for business issues. 

Merits of Setting up an LLC in Wyoming

Wyoming is a popular place state to form LLCs bbecause it has low overhead and yearly running costs. 

Most of the time, Wyoming is a good choice for founders who want to create an LLC. 

Wyoming doesn’t have a state income tax, a corporate tax, or a franchise tax, which makes it appealing to businesses that want to pay as little tax as possible.

Wyoming also has an easy-to-use LLC filing process that requires little paperwork. 

 You don’t have to make a working agreement, but you might want one for your needs. It’s also easier to run an LLC in Wyoming, where you only need to file a few extra forms with the state.

As we already said, Wyoming offers your assets the best safety and security. 

In addition to all LLCs’ legal protections, Wyoming also lets LLCs organize without revealing who owns the business or who their members are.

The best part is that you don’t have to live in Wyoming or even in the US to organize there.

Anyone in Wyoming can form an LLC if they have a business address, a registered agent, and other essential things. 

Merits of Setting up an LLC in Delaware

Delaware is famous for being a safe place for big businesses and C-Corps. 

Besides that, more than two-thirds of all Fortune 500 companies are based in Delaware. But Delaware also has some good things for LLCs.

The Court of Chancery is Delaware’s one-of-a-kind court system. Its main job is to handle business law and company disputes. 

The judges of the Court of Chancery have business experience and can address business issues more quickly without a jury.

In the same way that Wyoming does, Delaware protects LLCs’ assets and privacy very well.

 If a member of your LLC is sued, the Delaware Asset Protection Trust stops creditors from taking any of your LLC’s assets.

Delaware is also one of the few places that doesn’t require members and officials to list their names when filing. 

The public can see only the LLC and the listed agent’s name and location. 

To Wrap Up

As previously stated, Delaware’s primary benefit is its unmatched corporate service.

 It is a brilliant idea to start in Delaware to allow yourself this option if you want to convert your LLC to a C-Corp later on.

When creating an online or e-commerce business, a Wyoming LLC is a good option for non-residents and single owners who want to avoid raising startup capital.

 Wyoming has less paperwork and charges starting, and administration costs less than Delaware.

We hope this post helps you understand the main distinctions between forming an LLC in Delaware and Wyoming so you can choose which state is best for your company, 

Even though it doesn’t cover every detail and law.