Wyoming vs Delaware: The Real Cost Difference for Non-US Founders

Every American startup blog defaults to the same advice: incorporate in Delaware. It's repeated so consistently that founders stop questioning it, which is exactly the problem — that advice was written for a specific founder profile, and most non-US founders forming their first US LLC don't actually fit it. Here's the math nobody walks you through before you pick a state.

What Delaware actually costs you

Delaware's state filing fee is reasonable — $90. The recurring cost is where it adds up: a $300 minimum annual franchise tax, due every year, regardless of whether the company made a single dollar. Over five years, that's $1,500 in franchise tax alone, on top of registered agent fees you'll need regardless of state. Delaware's genuine advantage is its Court of Chancery — a specialised business court with over a century of corporate law precedent, and the structure US venture capital firms are most comfortable with. If you're planning to raise institutional VC in the next 12-18 months, that familiarity has real value during due diligence.

What Wyoming actually costs you

Wyoming charges $100 to file and $60 a year for the annual report — full stop. No franchise tax, no state income tax, no minimum business tax regardless of revenue. Five-year total: roughly $400 in state fees, compared to Delaware's $1,590. That's a $1,190 difference for doing nothing different operationally — same liability protection, same privacy on public filings, same ability to open a US bank account. Wyoming was also the first state to codify exclusive charging-order protection for both single-member and multi-member LLCs, which matters more than people expect: it means a creditor pursuing a judgment against you personally can intercept distributions from the LLC, but cannot force a sale of the company's assets or compel its dissolution. Several other states only extend that protection to multi-member LLCs, which is a meaningful gap for a solo founder.

The actual decision framework

This isn't close to a coin flip once you frame it correctly. Ask one question: are you raising institutional venture capital from US-based VCs in the near term? If yes, Delaware. The familiarity to investors, the legal infrastructure, and the C-Corp structure most VCs expect outweigh the few hundred dollars a year in franchise tax. This is exactly the founder profile Firstbase is built for — Delaware C-Corp formation with founder agreements and 83(b) election filing bundled in, because that paperwork becomes urgent the moment a term sheet shows up. If no — if you're running an e-commerce store, an agency, a bootstrapped SaaS, or anything not explicitly structured around an institutional raise — Wyoming is the rational default, and it's what most formation platforms steer non-resident founders toward for exactly this reason. doola defaults new founders to Wyoming for this same calculation, at $297 for the first year, no franchise tax ever.

What people get wrong about the decision

The mistake isn't picking Delaware. It's picking it without checking the box of why you're picking it — copying advice meant for a YC-track SaaS startup and applying it to a dropshipping store or a freelance agency that will never raise outside capital. That's $1,190 over five years spent on optionality you were never going to use. The reverse mistake exists too: a founder genuinely building toward institutional funding who chooses Wyoming to save the $1,190, then has to re-incorporate in Delaware mid-raise because investors expect it — which costs far more in legal fees and lost momentum than the franchise tax ever would have. Pick based on what you're actually building, not on which state name sounds more familiar from a blog post written for a different founder than you.