/ US entity choice · Delaware vs Wyoming

Delaware C-Corp vs Wyoming LLC, for an Indian founder.

Two states dominate US entity formation for international founders: Delaware (the legal default for VC-backed C-Corps) and Wyoming (lower-cost, higher-privacy LLC default). The right choice depends almost entirely on whether US venture capital is in your plan.

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/ The quick answer

Delaware if VC-funded; Wyoming if not.

Short decision rule:

Raising from US venture capital in the next 12 months? Delaware C-Corp. Not optional — US VCs invest in Delaware C-Corps.
Bootstrapping, cash-flow business, no US VC on the horizon? Wyoming LLC. Lower franchise fees, better privacy, pass-through tax.
Unsure? Start with Wyoming LLC. The F-reorg to a Delaware C-Corp is a routine 30-60 day conversion if the VC path materialises.

/ Franchise tax & annual cost

Wyoming is materially cheaper.

Delaware C-Corp annual costs:

Franchise tax: minimum USD 400 (assumed par value method), typical USD 400-1,000 for early-stage, can run USD 5,000+ for growth-stage with high authorised shares.
Annual report: USD 50 filing fee.
Registered agent: USD 100-300.
Total year 1 steady state: typically USD 600-1,500.

Wyoming LLC annual costs:

Annual report: USD 60 (plus USD 0.0002 per asset dollar, capped low).
Registered agent: USD 50-150.
Total year 1 steady state: typically USD 150-250.

Delta over 5 years: roughly USD 3,000-7,000 saved in Wyoming — meaningful for bootstrapped founders, immaterial for VC-track companies.

/ Privacy

Wyoming hides owner names; Delaware does not for LLCs either, but C-Corps vary.

Wyoming LLCs do not require public disclosure of members or managers on the annual report. Owner names are kept private at the state registry level. The registered agent sees them, and KYC/AML processes at banks will see them, but public searches do not.

Delaware LLCs similarly do not require public member disclosure. Delaware C-Corps also do not require public shareholder disclosure. State-level privacy is similar between the two.

The privacy advantage of Wyoming over Delaware is marginal for LLC/LLC comparison. For C-Corp/LLC comparison, both are private at state level.

BOIR / CTA (federal beneficial ownership reporting) status: currently exempt for domestic entities under the March 2025 FinCEN interim rule — same treatment for Delaware and Wyoming.

/ VC-fundability

Delaware wins decisively.

US VCs invest in Delaware C-Corps. Reasons:

Delaware corporate law is familiar, well-litigated, VC-friendly on preferred stock terms.
Standard VC term sheets, voting agreements, drag-along, protective provisions, information rights all assume Delaware.
Delaware Court of Chancery is the specialist corporate court — disputes resolve predictably.
Delaware General Corporation Law supports common VC mechanics (board classes, preferred share series, protective provisions).

Wyoming LLCs are not VC-fundable. US VCs will not invest into a Wyoming LLC — the LLC operating agreement is non-standard, member units do not translate to preferred stock, Section 1202 QSBS does not apply (LLC is not a C-Corp), 83(b) elections do not fit LLC profits-interests cleanly.

If VC is a possibility, start with Delaware C-Corp or plan the Wyoming-to-Delaware conversion before the term sheet.

/ Decision framework

Three scenarios.

Scenario 1: Bootstrapped SaaS, two Indian founders, Indian team, US customers via Stripe. No US VC planned. Choose Wyoming LLC. Pass-through to the Indian founders means no US entity-level tax. Form 5472 obligation attaches (annual filing). Lowest ongoing cost.

Scenario 2: AI startup planning to raise USD 2M seed from a US VC in 6 months. Choose Delaware C-Corp from day one. 83(b) elections for founders on day of incorporation. QSBS 5-year clock starts immediately. VC term sheet drops into standard Delaware structure.

Scenario 3: Not sure — maybe VC, maybe not. Start Wyoming LLC. If VC term sheet materialises, convert to Delaware C-Corp via F-reorg (30-60 days, tax-free). Lose: the time between Wyoming formation and C-Corp conversion does not count for QSBS 5-year holding. For most founders this is acceptable.

/ Ready when you are

Delaware or Wyoming — we scope it right the first time.

The right entity for your situation depends on your 12-month funding plan, your US revenue profile, and whether you plan to live in the US eventually. We scope all three, recommend, and incorporate. Standard setup includes EIN, bank account introduction, Form 5472 planning, and 83(b) elections where applicable.

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FAQ

Common questions, answered.

Which state has lower incorporation cost: Delaware or Wyoming?

Wyoming. Formation fee: Wyoming USD 100, Delaware USD 90-200 depending on entity type. Annual compliance: Wyoming USD 150-250, Delaware USD 600-1,500. Over 5 years, Wyoming saves USD 3,000-7,000 for a standard early-stage entity.

Can I convert from Wyoming LLC to Delaware C-Corp later?

Yes. Delaware allows direct statutory conversion of an out-of-state LLC into a Delaware C-Corp. Done as an F-reorg (IRC Section 368(a)(1)(F)) the conversion is tax-free in the standard founder scenario. Timing: 30-60 days. If VC raise is likely, convert before the term sheet.

Does Form 5472 apply to Wyoming LLCs?

Yes. Form 5472 applies to any 25%+ foreign-owned US entity with reportable transactions — Delaware, Wyoming, or any US state. For a Wyoming single-member LLC owned by an Indian individual, the annual pro forma 1120 + Form 5472 filing applies the same as a Delaware LLC.

Can an Indian founder be a Wyoming LLC member without a US SSN?

Yes. Wyoming does not require US SSN for LLC members or managers. The LLC obtains an EIN via Form SS-4 (fax or international phone, 4-8 weeks). The Indian individual files their own US obligations via ITIN or passport-based identification. Same mechanics as Delaware.

Does QSBS (Section 1202) apply to a Wyoming LLC?

No. QSBS applies to C-Corporation stock only. A Wyoming LLC member interest is not C-Corp stock, so QSBS does not apply. If QSBS eligibility matters, incorporate as a Delaware C-Corp from day one — the 5-year holding period starts from the C-Corp formation date. An LLC-to-C-Corp conversion resets the QSBS clock to the conversion date, not the LLC formation date.

Does BQP incorporate in both Delaware and Wyoming?

Yes. We handle both. Scoping typically starts with your 12-month funding plan — if US VC is on the horizon, Delaware C-Corp from day one. If not, Wyoming LLC with built-in conversion documentation if the plan changes. Request via get-a-quote.html.