I keep seeing Wyoming LLC this and Wyoming LLC that, but I'm wondering why Delaware doesn't get as much love for small businesses. I'm starting a tiny e-commerce thing and don't really want to pay Delaware's franchise tax if it's not worth it. Anyone here actually used a Delaware LLC for a small operation? What's the real deal?
LLC Formation
Everyone talks about Wyoming LLCs but what about Delaware?
Delaware is overkill for a tiny e-commerce. You'll pay more in fees and annual reports. Wyoming is cheaper and simpler.
But Delaware has the Court of Chancery! If you ever want investors, they love that predictability. That said, for a one-person shop, it's probably not necessary.
I looked into Delaware for my consulting LLC and noped out when I saw the franchise tax. Wyoming's annual report is like $60. Delaware's can be hundreds depending on your structure. Not worth it unless you're chasing VC money.
MangoTango88 nailed it. Delaware is for startups that plan to raise outside capital. If you're just selling t-shirts online, stixck with Wyoming or your home state.
Actually, Delaware isn't that expensive if you're a small LLC. The franchise tax for LLCs is a flat $300/year. Wyoming's is $60 minimum but can be more based on assets. So the difference isn't huge. But you also need a registered agent in Delaware, which adds cost. Still, the legal predictability is nice.
I've had a Delaware LLC for 5 years. Never had any issues. But I also have a Wyoming one. Honestly, for a small e-commerce, the state you operate in matters more for taxes. Delaware won't save you from nexus.
Oh great, another LLC thread. Let me guess: next you'll ask aboutt Nevada. 🙄
SarcasticSage lol. But seriously, Delaware is popular for corps, not LLCs. Most small businesses don't need it. If you're worried about privacy, Wyoming is better anyway.
I think the real question is: why are you forming an LLC in a state you don't live in? Unless you have a physical presence there, you'll still need to register as a foreign entity in your home state. That's double the fees. Just form locally.
Thanks for the input, everyone. I hadn't considered the foreign entity registration thing. My home state fees aren't too bad, so maybe I'll just do that.
Good call. Delaware only makes sense if you're planning to go public or raise big money. For a tiny e-commerce, local is fine.
TechyTurtle makes a good point though. A lot of people forget about foreign qualification. You could end up paying Delaware's fees plus your home state's. Not worth it.