Delaware is the state that investors and venture capital often associate with a US corporation. It has long-established, predictable corporate law and a specialized business court.
What Delaware offers
Predictable corporate law
Long-standing legislation and a large body of court decisions give companies and investors certainty about how the rules apply.
A specialized business court
Disputes over company governance are heard by the Court of Chancery, a court focused on business law.
The investor standard
Investors and venture capital often require a Delaware corporation, which is why startups planning to raise funding choose it.
Privacy from the public
The LLC formation document does not list members' names; mainly the name and registered agent are stated.
State fees
Figures from the official state websites (as of November 2026). Rates change, so we always check the current rules before forming. These are state fees only — our services are not included.
Failure to pay the annual tax brings a penalty and interest. A corporation also pays federal income tax (see below).
Is US income tax paid? When it is not
For an LLC owned by a foreign person: if all the conditions below are met, you generally pay no US income tax — only state fees and filing obligations. If even one condition is not met, tax may arise.
Conditions (all must apply at once)
- 1It is an LLC with a single owner who is neither a US citizen nor a US tax resident.
- 2The business is genuinely carried out outside the USA — no office, employees or activity in the USA.
- 3Income comes from services or sales outside the USA, not from US sources (for example, US dividends, interest or royalties are subject to withholding tax, by default 30%).
- 4The company has no tax obligations in another US state (for example because of sales to customers in a particular state).
Obligations that apply even without tax
- A US tax number (EIN).
- Annual filing of Form 5472 together with a pro forma Form 1120 with the IRS for a foreign-owned LLC — failure to file can bring a $25,000 penalty per failure.
- The annual fee and obligations to the state (see above) and a registered agent in the state.
- Tax obligations in your own country: a tax resident of your country may be taxed on income of a US company as well. A US LLC is therefore not a way to avoid taxes at home.
A corporation is a different case
A US corporation (C-Corp) is itself a taxpayer and pays federal corporate income tax, currently 21%. The rule “only state fees are paid” therefore does not apply to it. It suits mainly companies with investors.
Who Delaware suits
Companies planning investors and share issuance (Corporation), and LLCs where an investor or business partner requires it.
Delaware or Wyoming?
For an LLC without investors, Wyoming is cheaper (at least $60 a year versus $400 here). Delaware pays off when investors require it or you plan a corporation.
See WyomingOfficial sources
- Delaware Division of Corporations — Annual Report and Tax Information
- Delaware Code, Title 6, Chapter 18 — LLC Act (§18-1107, annual tax)
- IRS — Instructions for Form 5472
- IRS — Taxation of nonresident aliens
- IRS — Publication 542, Corporations
The information is general in nature and does not replace legal or tax advice.
Want to know which state fits your business?
Tell us what you do and where your customers are — we will recommend a suitable state and company type.