Introduction
Entrepreneurs looking for low-tax, business-friendly states often consider Wyoming and Delaware. Both states offer strong legal protections, no state corporate income tax for certain businesses, and privacy advantages, but they differ in annual fees, tax structure, and LLC benefits.
This guide compares Wyoming and Delaware’s business tax benefits, costs, and legal advantages to help you decide which state is best for your business.
Business Tax Comparison: Wyoming vs. Delaware
| Category | Wyoming | Delaware |
|---|---|---|
| State Income Tax | No | No (for out-of-state businesses only) |
| Franchise Tax | No | Yes ($300 minimum for LLCs, up to $200,000 for corporations) |
| Annual Report Fee | $60 minimum | $50 (LLCs), $300+ (Corporations) |
| Corporate Tax Rate | No corporate tax | 8.7% for corporations operating in Delaware |
| Sales Tax | No | No |
| Asset Protection | Strong | Strong |
| Privacy for LLC Owners | Yes (Anonymous LLCs allowed) | Limited |
| Business Court System | General state courts | Chancery Court (business-friendly) |
Which State Has Lower Business Taxes?
- Wyoming is the winner – Wyoming has no corporate tax, no franchise tax, and lower annual fees than Delaware.
LLC Formation: Wyoming vs. Delaware
Wyoming LLC Benefits
- No state income tax or franchise tax.
- Low annual report fee ($60 minimum).
- Allows anonymous LLC ownership (protects privacy).
- Stronger asset protection laws than most states.
Delaware LLC Benefits
- Respected corporate legal system (Delaware Court of Chancery).
- Preferred for venture capital and startups due to investor familiarity.
- No sales tax on purchases made in Delaware.
Best Choice for LLCs?
- Wyoming wins for most small businesses due to lower costs, better privacy protections, and no franchise tax.
- Delaware may be better for large corporations that need access to investors.
Corporate Taxation: Wyoming vs. Delaware
| Tax Type | Wyoming Corporations | Delaware Corporations |
|---|---|---|
| Corporate Income Tax | No | 8.7% (if operating in Delaware) |
| Franchise Tax | No | $175 – $200,000 (based on shares issued) |
| Annual Report Fee | $60 minimum | $300 minimum |
- Delaware is better for large corporations with investors, IPOs, or stock options.
- Wyoming is better for small business owners and startups who want to avoid high taxes and fees.
Which State Is Better for Privacy & Asset Protection?
Wyoming’s Privacy & Asset Protection Benefits
- Anonymous LLCs – Wyoming allows business owners to remain private.
- Charging Order Protection – Stronger protection for LLCs from lawsuits.
- No Residency Requirement – Non-residents can form an LLC easily.
Delaware’s Privacy & Asset Protection
- No anonymous LLCs – Owners must be listed in state records.
- Strong corporate laws – Preferred by investors but less privacy than Wyoming.
Wyoming wins for privacy – It offers anonymous LLC ownership and stronger liability protections.
Which State Is Best for Startups & Investors?
| Category | Wyoming | Delaware |
|---|---|---|
| Best for Small Businesses | ✅ Yes | ❌ No |
| Best for Tech Startups | ❌ No | ✅ Yes |
| Best for Investor-Funded Companies | ❌ No | ✅ Yes |
| Best for Privacy & Asset Protection | ✅ Yes | ❌ No |
- Wyoming is best for small businesses, freelancers, and real estate investors.
- Delaware is better for large corporations, startups seeking venture capital, and companies planning an IPO.
Cost of Doing Business in Wyoming vs. Delaware
Wyoming LLC Fees
- LLC Filing Fee: $100
- Annual Report Fee: $60 minimum
- Franchise Tax: None
Delaware LLC Fees
- LLC Filing Fee: $90
- Annual Report Fee: $50
- Franchise Tax: $300 per year for LLCs
Wyoming wins for affordability, with lower annual costs and no franchise tax.
IRS Compliance & Federal Tax Filing for Businesses
- LLCs & Sole Proprietors: File Schedule C (Form 1040).
- Partnerships: File Form 1065 & K-1s.
- S-Corps: File Form 1120S & K-1s.
- C-Corps: File Form 1120.
- Wyoming Sales & Use Tax Return: Required for businesses selling taxable goods.
Conclusion
- Choose Wyoming if you want lower costs, better privacy, and no franchise tax.
- Choose Delaware if you’re raising venture capital or planning an IPO.
For expert business tax planning, schedule a meeting with our CPA Anshul Goyal by clicking at https://calendly.com/anshulcpa/ now.
Frequently Asked Questions (FAQs)
1. Is Wyoming or Delaware better for LLCs?
Wyoming is better for small business owners, while Delaware is preferred for investor-funded corporations.
2. Do Delaware LLCs pay taxes?
Delaware does not tax out-of-state businesses, but LLCs pay a $300 franchise tax annually.
3. Does Wyoming charge a franchise tax?
No, Wyoming does not charge a franchise tax on LLCs or corporations.
4. Which state offers better privacy for LLC owners?
Wyoming allows anonymous LLC ownership, while Delaware requires owner names to be public.
5. Should I hire a CPA to set up my LLC?
Yes, a CPA ensures proper tax planning, compliance, and business structure optimization.
About Our CPA
Anshul Goyal, CPA EA FCA is a licensed Certified Public Accountant and an IRS Enrolled Agent (EA). He specializes in Wyoming & Delaware LLC formation, business tax planning, and IRS compliance.
Schedule a consultation today with Anshul Goyal, CPA, for expert business tax guidance.