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Editorial 6 MIN READ

Delaware vs Wyoming LLC: the real math

Year-one savings of about $230, a ten-year gap of roughly $2,400, and one structural caveat that erases both

The Editors
Staff, Incorporator.org
6 min read Updated
Contents 7 sections
  1. The fee math, line by line
  2. The foreign-qualification trap
  3. What Delaware is selling that Wyoming is not
  4. Privacy, after the Corporate Transparency Act
  5. Tax, trust, and edge cases
  6. Who should pick which
  7. Sources

Delaware LLC costs $390 in year one. A Wyoming LLC costs $160. That is the entire dollar answer to the Delaware vs Wyoming LLC question, and most of the rest of this page is about why the dollar answer is usually not the answer that matters.

The gap is real but small, and it collapses the moment you operate anywhere other than Wyoming. Everything else is about case law, privacy, and how long you expect the entity to live.

The fee math, line by line

Delaware charges $90 to file a Certificate of Formation for an LLC under 6 Del. C. § 18-201, and $300 a year in alternative entity tax under 6 Del. C. § 18-1107(b), due June 1 regardless of activity. Year one is $390. Every year after is $300. Ten years is $3,090.

Wyoming charges $100 to file Articles of Organization through the Secretary of State. The annual report License Tax under Wyo. Stat. § 17-29-209 is calculated on Wyoming-sited assets at the greater of $60 or two-tenths of one mill on the dollar ($0.0002), which means anything under $300,000 of Wyoming assets pays the $60 minimum. A holding LLC with no Wyoming real estate and no Wyoming tangible property sits at $60 forever. Year one is $160. Every year after is $60. Ten years is $700.

So the honest number: roughly $230 in year one favoring Wyoming, and roughly $2,390 over a decade. That is real money on a single entity and trivial money on any business that generates revenue.

It is also a gross number. It excludes the registered agent, which both states require. A commercial registered agent costs somewhere between $50 and $300 a year in either state, and the price range is almost identical, so the agent line cancels out of the comparison.

The foreign-qualification trap

Here is the sentence that matters more than the fee schedule. If your LLC does business in a state other than its state of formation, that other state treats it as a foreign LLC and requires it to register there, pay that state's filing fee, and pay that state's annual maintenance. The Wyoming savings evaporate the moment you operate in California, or New York, or Texas, or anywhere you actually sit.

California is the most expensive version of this. A Wyoming LLC doing business in California files Form LLC-5 with the California Secretary of State, pays the registration fee, and owes the $800 annual franchise tax under Cal. Rev. & Tax. Code § 17941 like any other California LLC. The Wyoming shell does not exempt you. It just adds a second registered agent, a second annual report, and a second set of filing deadlines on top of the California cost.

The only clean way Wyoming's cheap maintenance actually stays cheap is if Wyoming is where the business lives. A vacation property in Jackson Hole, a mineral interest, a holding LLC for passive investments with no operating nexus elsewhere. Any operating business in another state is paying twice.

This is the most common mistake in the Delaware-or-Wyoming conversation. People compare the home-state fee to itself rather than to home plus foreign qualification.

What Delaware is selling that Wyoming is not

The Court of Chancery. Delaware runs a separate equity court that hears corporate disputes without juries, decides them quickly, and produces written opinions the rest of the country treats as persuasive. Roughly three hundred years of continuous corporate precedent sits behind it. If your entity is likely to be in a dispute that turns on fiduciary duty, minority oppression, member deadlock, appraisal, or merger mechanics, that case law is the product you are buying.

Wyoming has a general-jurisdiction court system and a much thinner body of LLC case law. The Wyoming LLC Act (Wyo. Stat. § 17-29-101 et seq.) was adopted in 2010 and revised since; the statute is fine, but the interpretive backstop behind it is not comparable to Delaware's.

This only matters if you expect a dispute. Sophisticated investors writing a term sheet will ask for Delaware. Multi-party operating agreements with earn-outs and waterfalls will sit more comfortably in Delaware. An eventual exit through a stock sale will almost certainly run through Delaware counsel. A single-member LLC holding a rental property is never going to touch the Court of Chancery, and paying for the option is paying for something you will not use.

Privacy, after the Corporate Transparency Act

Wyoming's privacy pitch used to be that the Secretary of State does not require disclosure of members or managers on the formation filing. That is still true at the state level. It is no longer true at the federal level.

The Corporate Transparency Act, codified at 31 U.S.C. § 5336 and implemented by FinCEN's final Beneficial Ownership Information Reporting Rule published at 87 Fed. Reg. 59498 on September 30, 2022, requires most LLCs formed or registered in the United States to report their beneficial owners to FinCEN. Reporting begins January 1, 2024. Entities formed before that date have one year to file; entities formed in 2024 have thirty days.

The practical effect is that the Wyoming anonymous LLC is anonymous to the public state record and not anonymous to FinCEN. The federal report is non-public, so this is not a privacy collapse, but it is a material narrowing of what Wyoming anonymity buys you. A subpoena, a regulator, or a civil litigant with the right tools can reach the beneficial ownership file. A nosy competitor scrolling the Secretary of State's business search cannot. Those used to be closer to the same thing than they are now.

Delaware's LLC Act similarly does not require member or manager disclosure on the Certificate of Formation, so the state-level privacy profile is closer than the Wyoming marketing suggests; it is not a differentiator between the two states.

Tax, trust, and edge cases

Neither state levies a corporate income tax on an LLC's out-of-state income used as a passive holding vehicle. Wyoming has no personal income tax either. Delaware has a personal income tax but does not reach LLC income sourced outside Delaware held by a non-resident owner. For a pure holding entity, both states give you the same federal pass-through treatment and neither adds a state-level income tax on out-of-state receipts.

Trust shelf life is a real difference. Wyoming's rule against perpetuities permits trusts to last up to 1,000 years under Wyo. Stat. § 34-1-139. Delaware allows perpetual personal-property trusts under 25 Del. C. § 503, with a 110-year limit on real property held directly. Both states are deep into dynasty-trust territory and are the reason estate planners quote them in the same paragraph. If the plan involves generational wealth, either state works, and the choice is usually driven by trustee availability rather than statute.

Series LLCs exist in both. Delaware has had them longer and has more case law about them, which matters for the same reason the Court of Chancery matters.

Who should pick which

If your business operates somewhere, form it there. Anywhere else is a fee on top of the fee you were going to pay anyway.

If you expect investors, deal documents, or a stock-sale exit, pay the Delaware premium. The case law is the product, and the cost is a rounding error on a serious transaction.

If you need a passive holding vehicle, a vacation-property LLC, or a light-touch IP box with no operating nexus in another state, Wyoming is genuinely cheaper and the fee math is not a trick.

If you were picking on privacy alone, reprice the decision after January 2024. FinCEN now has the ownership file either way.

Rule of thumb: operate there if you operate, Delaware if you will be sued or sold, Wyoming if the LLC's only job is to sit quietly and own something.

Sources

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