For UK and European founders forming a US LLC, two states come up in almost every conversation: Wyoming and Delaware. Both are legitimate, well-regarded choices — but they serve different types of founders and different business goals. Choosing between them is less about which is objectively better and more about which is right for your specific situation. This guide gives you the factual basis to make that decision clearly.
Why Delaware Is So Well Known
Delaware has built its reputation as the dominant US incorporation state primarily through its corporate law framework. A significant proportion of major US corporations — including most Fortune 500 companies — are incorporated there, even when headquartered elsewhere. The state's Court of Chancery handles commercial disputes exclusively, producing a body of highly predictable case law that investors and legal professionals trust. Delaware's legal infrastructure was designed to accommodate complex corporate structures, equity arrangements, and institutional investment — and it does this better than any other state.
For startups planning to raise venture capital, Delaware's dominance is not just reputation. Most US VCs will specifically require a Delaware entity before investing. Many term sheets are structured around Delaware corporate law assumptions. If institutional fundraising is a near-term or medium-term goal, Delaware is not a stylistic choice — it is a practical requirement.
Why Wyoming Has Become the Alternative of Choice
Wyoming was the first state in the US to introduce the LLC structure, in 1977, and it has refined its LLC laws continuously since then. Its appeal to non-resident founders rests on four concrete advantages.
Cost: Wyoming's initial filing fee is $100 and the annual report fee is a minimum of $60 for most remote-operated LLCs. Delaware LLCs pay a flat $300 annual tax. Over five years, Wyoming's ongoing cost is $300 versus Delaware's $1,500 — a meaningful difference for a bootstrapped business.
No state income tax: Wyoming imposes no personal state income tax and no corporate income tax on pass-through LLCs. Delaware has no income tax on income earned outside the state, but the overall regulatory and tax framework is more complex for LLCs operating internationally.
Privacy: Wyoming does not require owner or member names to be publicly disclosed in state filings. Delaware's LLC filings also have relatively limited public disclosure, but Wyoming's privacy protections are consistently cited as stronger in practice. For founders who prefer to keep ownership information off public registries, Wyoming is the clearer choice.
Compliance simplicity: Wyoming's annual obligations for a remote-operated LLC are minimal — file the annual report in your anniversary month, pay the $60 fee, maintain a registered agent. Delaware's requirements for LLCs are similarly straightforward, but its franchise tax calculation for corporations is notoriously complex and can create surprises for founders who form a C-Corp.
The Drawbacks of Each
Delaware's primary drawback for non-VC founders is cost and complexity. The annual franchise tax for Delaware corporations is calculated using a method that can produce surprisingly large bills for companies with a high number of authorised shares — a common feature of VC-ready structures. For LLCs the annual cost is simpler ($300 flat), but Delaware's broader ecosystem is oriented around institutional business, not lean international operators.
Wyoming's primary drawback is that it is not Delaware. For founders approaching US VCs, some institutional investors will ask about state of formation and may express a preference for Delaware. Wyoming is not a red flag, but it may require a conversion to Delaware if a funding round materialises — and conversions, while possible, add cost and complexity. Wyoming's broader professional service ecosystem is also smaller than Delaware's.
Which State Is Right for You?
Choose Delaware if you are:
- Actively seeking US venture capital — most VCs require Delaware, and a future conversion is avoidable if you start there
- Planning to issue equity or stock options to co-founders or employees — Delaware's corporate law handles this better
- Anticipating complex shareholder arrangements or a structured acquisition or exit
- Working with US legal advisers who specifically recommend Delaware for your situation
Choose Wyoming if you are:
- Running an online, consulting, or service business without near-term VC plans
- Bootstrapping or building a lifestyle or location-independent business
- Prioritising low ongoing costs and minimal administrative burden
- Valuing privacy and preferring to keep ownership information off public records
- Operating as a solo founder without complex equity arrangements
For the majority of UK and European founders launching a US company without immediate plans for institutional fundraising, Wyoming delivers everything needed at meaningfully lower ongoing cost. Delaware's advantages are real — but they matter most in contexts that most non-resident founders are not yet in.
Practical Considerations for Non-Residents
Regardless of which state you choose, every US LLC requires a registered agent with a physical address in the formation state, an EIN from the IRS, and ongoing annual compliance filings. Foreign-owned single-member LLCs must also file Form 5472 with the IRS annually — a requirement that applies in both Wyoming and Delaware. See our Form 5472 guide for details on this filing.
Ready to Form Your LLC?
We help UK and European founders form Wyoming and Delaware LLCs entirely remotely. Our licensed Enrolled Agent Richard Williams handles EIN applications directly, and we advise on which state suits your specific situation.
Why Choose Wyoming — Full Guide
How to Start a US Company from the UK or Europe
Form 5472 — Annual Federal Filing
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