Incorporating Your Business: A Case for Delaware or Wyoming

July 10, 2023

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should you incorporate in delaware or wyoming

When it comes to incorporating a business, choosing the right state can have a significant impact on its legal framework and ultimate success. Two states that frequently attract entrepreneurs and businesses are Delaware and Wyoming. Both states offer unique advantages that make them attractive destinations for company incorporation. Why do companies often choose Delaware or Wyoming? What are the key differences between registering a company in each state?

Benefits of Incorporating in Delaware

Our Corp1 Delaware team will tell you that Delaware has long been the premier choice for businesses, with over 66% of Fortune 500 companies incorporated there and the Secretary of State being one of the largest employers in the state. Here are the primary reasons why companies opt for Delaware:

  1. Business-friendly legal framework: Delaware’s Court of Chancery is renowned for its expertise in business law. Its clear and predictable legal framework offers a level of certainty and expediency that may be attractive to businesses.
  2. Flexibility in corporate governance: Delaware provides companies with considerable flexibility in structuring their corporate governance. This includes relaxed requirements for board meetings and the ability to create different classes of stock.
  3. Privacy and anonymity: Delaware allows companies to maintain a high degree of privacy and anonymity for shareholders, directors, and officers. This feature is particularly beneficial for businesses seeking to protect sensitive information.
  4. Business-friendly tax environment: Delaware offers favorable tax laws, including no corporate income tax for companies that do not operate within the state. This provision has attracted numerous holding companies and intellectual property-intensive businesses.
  5. No physical presence requirement.

Benefits of Incorporating in Wyoming

Our growing Corp1 Wyoming office sees Wyoming’s potential as a rising star. Wyoming is increasingly gaining attention as a business-friendly state. Here’s why companies are considering Wyoming:

  1. Favorable tax environment: Wyoming is known for its low-tax environment, with no corporate income tax, franchise tax, or personal income tax. This makes it an attractive choice for entrepreneurs looking to minimize their tax burden.
  2. Strong privacy protection: Similar to Delaware, Wyoming offers strong privacy protection. Shareholders’ identities are not required to be disclosed in public records, providing an extra layer of confidentiality.
  3. Asset protection: Wyoming has robust asset protection laws, making it an appealing option for businesses seeking to shield their assets from potential lawsuits or creditors.
  4. Low compliance costs: Wyoming has minimal bureaucratic red tape and low compliance costs compared to many other states. It offers a streamlined and efficient process for incorporating and maintaining a business.
  5. No physical presence requirement.

While both states offer advantages, there are notable differences regarding company incorporation:

  1. Formation fees: Delaware typically has higher initial formation fees than Wyoming. Delaware’s annual franchise tax for corporations also varies based on the company’s authorized shares, while Wyoming has a flat annual fee (Wyoming Annual Report License tax is $60 or two-tenths of one mill on the dollar ($.0002) whichever is greater based on the company’s assets located and employed in the state of Wyoming).
  2. Expedite options: Delaware Division of Corporations offers a range of expedite options, from 24 hours to 30 minutes. Wyoming Secretary of State Business Division has no expedite options and filings take 10-15 business days to process.

Delaware and Wyoming offer unique advantages that cater to different needs. Delaware’s longstanding reputation makes it a top choice. However, Wyoming’s commitment to growth is attracting businesses seeking alternative options. Ultimately, entrepreneurs should carefully consider their specific requirements, business goals, and consult with legal professionals before deciding where to incorporate their company.

As a reminder, the information in this article is provided by Corp1, Inc. and is not intended to serve as legal or tax advice. Please reach out to your law or tax professional for recommendations regarding incorporation or feel free to request a vetted referral from the team at Corp1, Inc.