Wyoming vs Delaware: Which State Should You Incorporate In?
Delaware is the default choice for incorporation, but Wyoming offers lower costs and no franchise tax. Here is a practical comparison for founders and CFOs.
The conventional wisdom
Delaware is where companies incorporate. It has been the default choice for decades, and for good reason: a specialised Court of Chancery, well-developed corporate law, and familiarity among investors and lawyers.
But conventional wisdom deserves questioning, particularly when Wyoming offers many of the same benefits at a fraction of the cost.
Cost comparison
| Item | Delaware | Wyoming |
|---|---|---|
| Formation filing fee | $89 | $100 |
| Annual report fee | $50 (corp) | $60 (minimum) |
| Franchise tax (minimum) | $400 (corp) / $300 (LLC) | $0 |
| Registered agent (typical) | $100-300/yr | $50-100/yr |
| Year 1 total (corp) | $639-739 | $160-260 |
| Annual ongoing (corp) | $550-750 | $110-160 |
For a single entity, the difference is $400-500 per year. For ten entities, that is $4,000-5,000 annually. Over five years, $20,000-25,000.
The franchise tax gap
This is the biggest difference. Delaware corporations owe a minimum $400 franchise tax (and potentially much more based on authorised shares or assumed par value). Wyoming has no franchise tax. Zero.
Wyoming's annual report fee is $60 or $60 per $1,000 of assets located in Wyoming, whichever is greater. For most companies with no assets physically in Wyoming, it is $60.
Legal framework
Delaware's advantage is real but often overstated:
Court of Chancery. Delaware's specialised business court is genuinely valuable for complex corporate disputes. Judges are experts in corporate law. Decisions are faster and more predictable than general courts.
Body of case law. Decades of precedent on every conceivable corporate governance question. Lawyers know what to expect.
Wyoming's response. Wyoming established its own Chancery Court in 2023, modelled on Delaware's. It is new and untested, but the intent is clear. Wyoming has also adopted corporate statutes that closely mirror Delaware's.
When Delaware is worth it
- Raising venture capital. Most VCs strongly prefer (or require) Delaware incorporation. Their term sheets, SAFEs, and preferred stock documents are drafted for Delaware law.
- Planning an IPO. Nearly all public companies are incorporated in Delaware.
- Complex governance structures. Multiple share classes, supermajority provisions, and shareholder agreements are better tested under Delaware law.
When Wyoming wins
- Bootstrapped businesses. No franchise tax saves real money.
- Holding companies. Wyoming's asset protection and trust laws are among the strongest in the US.
- LLCs. Wyoming invented the LLC and its statutes remain among the most flexible.
- Privacy. Wyoming does not require disclosure of members or managers in formation documents (though BOI reporting now requires federal disclosure regardless).
- No state income tax. Wyoming has no corporate or personal income tax.
The practical answer
If you are raising institutional capital or planning a liquidity event, incorporate in Delaware. The legal infrastructure and investor expectations make it the rational choice despite the higher cost.
If you are bootstrapping, building a holding structure, or simply want the lowest-cost, most business-friendly incorporation, Wyoming is hard to beat.
Either way, CompCal tracks your filing obligations regardless of jurisdiction.