Delaware LLC vs. Wyoming LLC, Which one is Better for Non-US Residents?

Napoleon

Feb 12, 2024 — 5 min read

Most non-US resident business owners wonder if they can start a limited liability company (LLC) in the US. Actually there're no specific law preventing you from filing for a United States LLC. However, even if you're a non-resident, you must follow all filing requirement rules and taxation.

Delaware LLC and Wyoming LLC are popular LLC options for US non-residents, but which is a better choice for you? In this guide, you’ll learn more about these two LLCs so you can make an informed decision at the end.

What's the Difference Between Delaware LLC and Wyoming LLC?

In simple terms, Delaware LLC is for investors who would love to raise money from investors. On the other hand, Wyoming is an excellent option for smaller investors seeking lower company fees. Wyoming doesn't have a corporate or personal income tax.

Here is a table showing the features of both LLC

Features	Delaware LLC	Wyoming LCC
Paperwork	Low	Low
Incorporation cost	$90	$100
Maintenance cost	$325+	$60
Dissolution cost	$204	$60
Asset protection	Strong	Strong
LCC members privacy	strong	Strong
Specialized court	Available	Not available
Investors preference	common	Not common

Remember, your LCC tax rate will be 0%; that's why we've not looked at tax differences in the two states. No matter where you are, a US non-resident LLCs don't owe United States tax if they don’t have:

employees in the US
a premise in the US
don't spend over 90 days in the US in a year

If you fall into this category, Delaware LLC and Wyoming LLC are the ideal for your business if you're a US non-resident. Let's explore each LLC in detail and have an insight.

Delaware LLC for Non-US Residents

Delaware is a hub for more than 500 companies for a good reason. Firstly, its business-friendly jurisdiction attracts foreign business owners for many reasons, such as

Low bureaucracy: Delaware LLC is friendly and you don't need to submit many documents to the state secretary. Additionally, it doesn't require annual report filing. But you must file the franchise tax for your company to be operational.
Maintenance fee: Delaware LLC's initial incorporation cost is $90, but the annual report fee may range from $25 - $125. In case of dissolution, the price is $204. Every operating amendment fee will cost you about $200 or more.
Franchise tax: unfortunately, whether you're a non-US resident or not, Delaware requires you to pay annual franchise tax for registering your company under its jurisdiction. You need to pay a flat rate of $300 yearly.
LLC member privacy: in Delaware LLC, the names are not published in public records; you will only find registered agent names.
Asset protection: Delaware offers protection to the LLC. The LLC is separate from the individual entity, meaning your LLC assets are protected from your personal creditors.
Court of Chancery: The Court of Chancery is the biggest reason most corporations choose Delaware. This state of Delaware court is unique and mainly focuses on commercial and business law disputes. Its advantage is that it doesn't rely on a jury but on judges with a business background to resolve the issues quickly because of their massive understanding of business.
You can easily convert your LLC to a C-Corp: the processing of converting a Delaware LLC to a Delaware C-Corp is easy. If you get investors, they require non-US residents to change your LLC to Delaware C-Corp before receiving money in your accounts.
Moving an LLC from another state to Delaware is easy to move to Delaware LLC.

Form Your LLC with Foundeck Today

Foundeck offers a range of fast and efficient online company formation services, allowing you to register a business structure of your choice quickly. To get started, kindly contact us here.

Wyoming LLC for Non-US Residents

Since the invention of Wyoming LLC in the 1970s, it's known for its business-friendly policies that attract global investors to register their companies there. If you're planning to register your business here, here is what to expect;

Low bureaucracy: Wyoming doesn't require LLC members to submit their operating agreements, and members list to the state secretary. Although other states require you to submit many documents, Wyoming doesn't. But you are required to file a simple and straightforward annual report. The annual report informs Wyoming that your business is still operational. That's all the paperwork you need, so most start-ups prefer Wyoming.
Low maintenance cost: Wyoming LLC has a low maintenance cost. You need a $100 incorporation fee, and after the second year, you will owe the state of Wyoming a $60 annual report fee. That's the administrative fee you must pay unless there are changes. The changes include changing your business' name or adding new members. The good news is when making changes, you pay a onetime fee. However, changes like changing the registered agent won't require you to pay. In case of a dissolution, you need to pay $60.
Franchise tax: in Wyoming, no franchise tax is charged for incorporating your company in their state.
Asset protection: just like in Delaware LLC, your business assets will be untouched if you get in trouble with creditors. The same case will apply to your purchases if the creditors come for your LLC assets. Wyoming is known for its sturdy protection laws, unlike many other states.
LLC members' privacy: Wyoming LLC members aren't published in state public records. If a person researches the founder of the LLC, they will find the registered agent's name.
Finding opportunities: investment funds can invest in LLCs like Wyoming LLC. However, some investors may need you to transfer your Wyoming LLC to Delaware LLC and convert it to C-Corp if you need investment.
Converting to C-Corp: if you want to start your business as an LLC, then changing to C-Corp Wyoming is the best way to start. You can easily convert it to C-Corp.
Moving the Wyoming LLC to another state: It is easy to move it to any other State; you need a small fee and a few days and can domesticate it there.

Delaware LLC vs. Wyoming LLC, Which is Best for Non-US Residents?

Both states offer massive benefits to non-US residents' investors, but the slight variation between the two shouldn't be ignored. They make a big difference depending on the nature of your business.

Wyoming LLC is great because of its low-cost maintenance and strong asset protection. Incorporating your company in Wyoming will save some dollars compared to Delaware. This is because, in Wyoming, you don't file a franchise tax, making it ideal if you're starting your business on a limited budget.

On the other hand, Delaware LLC reaps better deals in efficient dispute resolution thanks to the Court of Chancery; that's why most investors like it. If you would love funding, Delaware LCC is the most ideal compared to Wyoming LLC.

But you can start with Wyoming LLC and later switch to Delaware LLC if you have a fundraising roadmap. When ready, switching from Wyoming LLC to Delaware LLC and then to Delaware C-Corp is easy. The process takes some hundred dollars and a few days to complete.

Winding up

Deciding whether to choose a Delaware LLC or Wyoming LLC for non-US residents depends on what you want to do. Delaware LLC is a better option to venture into a business that will engage funds or investors. Although investors may invest in a company from any LLC, many investors require you to incorporate your business in Delaware. Wyoming LLC is ideal for business owners in freelancing, e-commerce, and service-based businesses. However, if you are starting up and want to maintain low costs for your LLC, register your company in Wyoming, and you can transfer it later to Delaware. If you have any questions on how to form your company in the US, don’t hesitate to contact us, and we’ll do everything we can to help.