Which Is Best for You: Delaware vs. Nevada vs. Wyoming LLC

Limited liability companies (LLCs) have long been a popular business structure for people who want to protect their personal interests. The big question is often which state offers the best benefits for these types of businesses. The answer isn’t always a straightforward one.

As with many laws in America, each state that has an LLC legislator has certain factors that are unique to that area. In this article, we’ll be making a state comparison of Delaware vs. Nevada vs. Wyoming LLC to determine which is the best for you. At first glance, it may be clear which one is the winner, but your opinion might change when you take a closer look at the relevant details.

Overview: Delaware vs. Nevada vs. Wyoming LLC Incorporation

Delaware: Historically Incorporation-Friendly

Delaware has been somewhat of an LLC hub over the years. With over 60% of Fortune 500 companies being incorporated there, it’s safe to say that this state is a bit of an incorporation-friendly hot spot.

Two statutes, the Limited Liability Act and the Delaware General Corporation Law, go a long way toward protecting business owners’ personal interests. When a business conflict reaches the courtroom, it isn’t judged by a jury. Instead, only judges specializing in business law preside over these cases and make rulings based on extensive knowledge. These courtrooms are well-versed in business disputes, with over 1,000 such cases being processed in Delaware each year.

Business owners are able to maintain an extra layer of privacy in Delaware, as they aren’t required to divulge their personal details, such as their names or addresses. Other states make these matters a part of the public record, meaning that people can quite easily find out how much someone owns. At the same time, any filings you make with the Delaware Division of Corporations will indeed form part of the public record.

Tax laws for Delaware businesses are also very accommodating, and businesses can create what’s known as “series” incorporates, which are smaller companies functioning under the umbrella of a larger one.

You might also find that working with this state will save you money. Registering a business in Delaware costs $90, a low amount in comparison to other states. If you own an incorporate in Delaware but don’t do business there, you won’t be required to buy a license. Many people outside of the state end up creating LLCs in Delaware for this exact reason. You also aren’t required to have a bank account in the state or to have meetings there in order to have a Delaware LLC.

Incorporate in Nevada: High Degrees of Privacy

In no way an inferior option, Nevada has also been known to be good to its incorporations. Legislature for this kind of business structure in the state is still relatively new, having only started in the 1990s. However, it’s developed rapidly, making Nevada solid competition for other states.

Rivaling Delaware in the tax department, Nevada LLCs get a break from corporate, franchise, and income tax. You also won’t have to pay taxes on corporate profits or shares, making the burden on your pocket much less.

Companies don’t need an extra director for incorporation in Nevada. This makes things much easier for small businesses that don’t have the vast manpower of bigger corporations.

Starting up an incorporate in Nevada doesn’t come cheaply, though. You’ll need to pay the Secretary of State a hefty $425, which is much higher than some other states will charge.

It’s important to keep in mind that if a lawsuit should arise against your business in another state, Nevada law might not be upheld, depriving you of the protection you would have otherwise had. The same rule applies to taxes, so if you’re looking to start a Nevada LLC in another state, consider how those factors will apply to you. Even if you’re running an online business, you’re still running it from a location that’ll have its own rules.

Nevada goes a long way toward protecting business privacy, allowing owners to keep their identities hidden in the public record. However, other members such as directors and managers don’t enjoy the same level of discretion.

Incorporate in Wyoming: Up and Coming

Another, “younger” state, Wyoming isn’t to be sneezed at in this category. The state has a number of benefits outweighing its rivals. In fact, some might even argue that the Wyoming incorporate legislature is one of the best options available in the business world.

Wyoming tends to be good for LLCs, even finding ways to accommodate people who aren’t American citizens. This means that people from almost anywhere in the world can start a Wyoming LLC without having to relocate or change their citizenship. You can open a Wyoming bank account anywhere in America.

If you’re looking for a state that isn’t going to cost you an arm and a leg, this could be the one, as Wyoming’s renewal fee is much lower than Nevada’s. Though, bear in mind that you’ll still have to pay your agent, along with other fees. One can easily forget about it when getting lost in promises of low renewal costs. However, if you miss your annual payment deadline, you’ll never be able to renew it. While most states would allow you to reinstate an LLC, you would have to start a new one in Wyoming.

All records, both personal and business, are closely protected in Wyoming, and since the state doesn’t have an agreement with the IRS, you have added anonymity.

Conclusion

Business is anything but an exact science. One can never know how things will turn out when starting a new venture, as many things that are outside of your control may jeopardize you. That’s why it’s important to cover as many of your bases as you can before taking the leap. Having an LLC will help you to weather a storm if it should occur.

Deciding on which state to establish your company depends on your personal business needs. Are you aiming for lower taxes or greater privacy? Do the 110+ years of Delaware legislature appeal to you, or do you want a younger option like Wyoming or Nevada?

It’s important to remember that the laws of your chosen state don’t nullify those of the country or state you’re operating from. Make sure that you have sufficient knowledge of both when making your state comparison.