Wyoming vs Delaware LLC: Which State Should Software Founders Choose?
A no-nonsense comparison of Wyoming and Delaware for LLC formation. Costs, taxes, privacy, and when each state makes sense for software founders.
Wyoming and Delaware are the two most popular states for LLC formation among software founders. Here's how they compare and which one is right for you.
The short answer
- Wyoming if you're bootstrapped, self-funded, or building a side project
- Delaware if you plan to raise venture capital
That covers about 90% of cases. Read on for the details.
Cost comparison
| | Wyoming | Delaware | |---|---|---| | QuickBiz fee | $150 | $150 | | State filing fee | $100 | $90 | | Total to form | $250 | $240 | | Annual report | $60/year | $300/year (franchise tax) | | State income tax | None | None on out-of-state income | | Year 1 total cost | $250 | $540 |
Wyoming is $290 cheaper in year 1 and $240 cheaper every year after that.
Why VCs prefer Delaware
Venture capital firms prefer Delaware for a specific reason: the Court of Chancery. It's a specialized business court with decades of case law that makes legal outcomes predictable. When a VC invests in your company, their lawyers know exactly how Delaware law works.
If you're raising a seed round or Series A, investors will likely ask you to incorporate in Delaware. It's not a legal requirement — it's a convention that reduces friction during due diligence.
Why Wyoming wins for bootstrapped founders
If you're not raising venture capital, Wyoming is almost always the better choice:
- No franchise tax: Delaware charges $300/year regardless of revenue. Wyoming charges $60/year.
- No state income tax: Wyoming has no personal or corporate income tax.
- Privacy: Wyoming doesn't publicly disclose LLC member names. Delaware does require them on annual franchise tax filings.
- Asset protection: Both states have strong charging-order protections, but Wyoming's statute is slightly more protective.
What about your home state?
If you form in Wyoming or Delaware but live in another state, you may need to register as a "foreign LLC" in your home state. This typically costs $50-$200 and requires an additional annual filing.
For many software founders — especially those with no physical presence in any state (remote work, digital products, online customers) — this isn't necessary. But if you have an office, employees, or significant customers in your home state, check with a tax professional.
The bottom line
| Situation | Best state | |---|---| | Bootstrapped SaaS | Wyoming | | Freelance developer | Wyoming | | Side project making money | Wyoming | | Planning to raise VC | Delaware | | Already have VC term sheet | Delaware | | Indifferent investors | Wyoming |
Both states are excellent for LLC formation. The difference comes down to your funding plans and how much you want to spend on annual fees.
Form your LLC with QuickBiz — $150 + state fees, everything included.