I run a small software consulting business on my own and I registered a Delaware LLC about two years ago. I don't have any employees and I operate entirely online. Paid the franchise tax and the annual registered agent fee without much thought so far, but the fees are adding up and I'm starting to wonder whether the Delaware advantages actually apply to a business like mine. My customers are spread around and I have no physical presence anywhere other than my home. Would appreciate perspective from anyone who has run a similar setup or switched states.
LLC Formation
Is a Delaware LLC still worth it for a one-person online business?
For a single-member consulting LLC with no investors and no physical ties to Delaware, the state really doesn't give you much you can't get elsewhere. The main reason Delaware wins is case law and the court of chancery, which matters when you have shareholders and board disputes. That's not your situation, though.
What are you currently paying for the franchise tax and agent combined? That number might make the decision obvious.
Worth flagging that state of formation and where you actually do business are two different things. Many people who form in Delaware still need to register as a foreign entity in their home state, so they end up paying two sets of fees. Did you do that? If not you might be out of compliance where you live.
I moved my single-member LLC to my home state last year for this exact reason. The savings were real but it was more paperwork than I expected so factor in the time cost.
Not really needed. One person, no investors.
tidalhemlock is right and I think a lot of people overlook the foreign registration piece. If you're actually running the business from your home state without registering there you may have a compliance gap that matters more than the Delaware fees themselves. I'd sort that out before deciding whether to redomicile, because it affects what the true cost comparison looks like.
It depends a bit on how you want to be taxed too. If you're a single member LLC it's likely disregarded anyway and the state of formation doesn't change your federal treatment. So the only real question is state-level cost and admin burden.
How did you find the conversion process? Thinking of doing the same but dreading the paperwork.
One thing I'd push back on in this thread: people keep saying Delaware is pointless for small businesses, and while I mostly agree, if you ever want to raise money or bring on a co-founder later the switch is more painful than just starting there. Not saying OP should stay, just that it isn't purely about the annual fees.