We get questions from clients all the time whether they should incorporate in Delaware or Wyoming or some other state. Most new entrepreneurs are stuck between choosing Delaware or Wyoming and we as Clemta, guide them through their decision.
With a quick Google search, you can notice that Wyoming and Delaware are both business-friendly states to incorporate in the US. However, the important factor to consider is to choose the most suitable state for YOU and YOUR BUSINESS.
U.S. Citizens
If you are a U.S. citizen; you should incorporate where you live, in your home state. If you register a corporation or LLC in a state you don’t live in, you are going to have to do a filing called Foreign Entity Registration. You can check the conditions and forms here for Delaware and here for Wyoming.
With the foreign qualification, you are going to let the state know about the business you have in the other state. This will result in you having to pay fees in both states and have a registered agent in both states.
BUT If you are not a U.S. citizen and you don’t live in the U.S. then you can consider choosing between Wyoming and Delaware. Keep reading and let’s put an end to this discussion between these states. The most important question to ask is what matters to your company?
Both Wyoming and Delaware are foreign-friendly states and they provide tax benefits.
Most of the time we recommend Wyoming for many reasons mentioned above BUT there are some situations we would recommend Delaware. Keep reading and let’s step through the most important reasons.
| Wyoming | Delaware | |
| No state corporate income tax | ✔ | |
| No tax on corporate shares | ✔ | ✔ |
| No franchise tax | ✔ | |
| Minimal annual fees | ✔ | ✔ |
| One-person corporation | ✔ | ✔ |
| No annual report is required until the anniversary of the incorporation date | ✔ | |
| No general business license is required | ✔ | ✔ |
| Nominee shareholders are required | ✔ | |
| Share certificates are not required | ✔ | |
| Minimal initial filing fees | ✔ | |
| No minimum capital requirements | ✔ | ✔ |
| Meetings may be held anywhere | ✔ | ✔ |
Wyoming LLC & Corporations
1.Taxes
Most advantageous tax regulation for individuals is the fact that Wyoming doesn’t impose a corporate income tax. Also, you are not required to pay personal income tax if you are operating your business in the state, Wyoming.
There is no corporate tax.
There’s also no excise tax, estate or inheritance tax, intangible tax.
The only requirement to keep in mind for taxes is annual license tax when incorporating in Wyoming. Corporations and LLCs formed in Wyoming are required to pay annual license tax when filing their annual report each year.
Overall, the absence of general major business taxes like state income tax and corporate tax makes Wyoming one of the most favorable states to form your company. You can read more about tax climate in Wyoming from our blog article here.
2. Annual Fees
Paying annual fees is a very important part of owning a company. With this step, you keep your company’s good standing status and save yourself from greater fees and interests.
In Wyoming, the annual fee is very inexpensive compared to Delaware. For foreign and domestic LLCs, Corporations and LPs the minimum annual report fee is $50 up to date. There is also a $2 processing fee. The fee changes according to total amount of your value assets.
To determine when your Annual Report is due, you can check here from the database of Wyoming Secretary of State.
You can also pay annual fee for your company from Wyoming’s from online portal here.
3. Court System
Court system of Delaware is very developed as mentioned below. However, you may want to consider until your company is large and, in the meantime, just registering in Wyoming to save the annual fees.
Delaware LLC & Corporations
1. Taxes
Delaware has no sales tax but it does have an income tax whereas Wyoming has no income tax but it has a sales tax. You should determine if it will have a big tax implication on your business.
Also, Delaware’s state income tax is not needed for the people who are from different states and countries.
You can read more info about tax savings you receive by incorporating in Delaware from our blog article here.
2. Annual fees
In Delaware annual fee is higher in price according to Wyoming. You can read our blog article about annual fees in Delaware associated with a C-Corp and LLC.
You can file your annual report and pay your business entity tax here from Delaware State thorough an online portal.
3. Court system
Delaware has a court system called Court of Chancery that is very experienced in business so you don’t have to deal with a lawsuit with a judge that is not business-friendly.
Delaware is also a state we recommend If you plan on raising money from outside investors. You can raise money from investors regardless of which state you incorporate in but sometimes investors prefer that you incorporate in Delaware so the investor can have the safety of Delaware courts. Your investor may prefer Delaware because of its favorable business laws.
So, if you’re an entrepreneur looking to register your business in the United States and you don’t know what state to register in or what type of business entity to choose from then you can contact Clemta and we will answer your questions and guide you.
We’ll do all the complicated paperwork and filings for you so that you can focus on growing your business.
What is Clemta’s Recommendation
Wyoming or Delaware?
Wyoming usually offers better benefits to smaller companies with fewer taxes and low costs. So, we offer smaller companies to register in Wyoming to benefit from lower costs.
Whereas, Delaware tends to attract larger corporations that can benefit from its well-developed legal system and the court system.
As Clemta, Wyoming or Delaware, or any other state you want to register, we offer a complete consultancy in terms of your incorporation and post-incorporation procedures. You may check our website and pick out of our services according to your needs with one-click. Clemta will handle the rest for you.
