Wyoming or Delaware: Where a Non-Resident Should Form an LLC (and Why It's Not About Taxes)
I break down, step by step, which state a non-resident founder should choose for a U.S. LLC. Spoiler: since you don't live in the U.S., the choice of state is about your business's needs, not about "dodging taxes." Delaware is for venture capital and startups; Wyoming is for bootstrapped businesses, e-commerce, and privacy. Plus what matters equally in any state: an EIN without an SSN, a bank, Stripe, and the mandatory Form 5472.
Where this question even starts
Almost every other person who writes to me "I want to open an LLC in the U.S., but I live abroad" immediately asks: "Katya, which state is the most tax-advantageous — Wyoming or Delaware?"
And this is where I always gently pump the brakes. Because the way the question is framed hides a mistake that later costs people money and nerves. For a U.S. non-resident, the choice of state of formation is not about taxes. It's about what your company specifically needs: attracting investors, saving on fees, protecting privacy.
Let's break it down calmly and in plain language, so you make the decision consciously — not on the advice of some chat where "everyone recommends Wyoming."
Why, for a non-resident, the state isn't about taxes
When an American forms an LLC, they have a "home state" — the one where they physically live. And that state taxes their income as a resident, regardless of where the company is registered. So for locals, the choice of state really can affect personal taxes.
As a non-resident living outside the U.S., you have no "home state" at all. That means there's no state that will "catch" you as a resident and make you pay local income tax on your personal income. Your federal obligations are determined not by the state of formation, but by whether you conduct a US trade or business and whether you earn income from U.S. sources.
In plain terms: forming an LLC in Wyoming does not, by itself, make your business "tax-free." I've broken this misconception down in detail in a separate article — The Tax-Free Wyoming LLC Is a Myth — and I highly recommend reading it if that's what you were promised.
So forget for a moment about "where the taxes are lower." The right question sounds different: "What jobs will my company be doing over the next 2–3 years?" The state depends on the answer.
Delaware: the gold standard for startups and investment
Delaware is the state you choose when serious growth and outside money are in the plans.
What makes it good:
What makes it inconvenient for a non-resident:
In short: Delaware makes sense if you're building a startup for investment, not if you're "just selling products on Amazon."
Wyoming: price, privacy, and simplicity
Wyoming is the choice for those who build a business with their own money and want minimal expenses and maximum confidentiality.
What makes it good:
What makes it inconvenient:
In short: Wyoming is a great fit for bootstrapped projects — solo consulting, freelancing, e-commerce, dropshipping, a holding company for assets. Wherever price and privacy matter, not venture money.
What matters equally in any state
And now the most important thing, which for some reason goes unmentioned in the "Wyoming vs. Delaware" arguments. For a non-resident, 90% of the real work doesn't depend on the state at all. Here's what you'll have to do in any case.
An EIN without an SSN
An EIN (the company's federal tax number) can and should be obtained even if you don't have an SSN or ITIN. Many people don't believe it, but yes — it's a standard procedure via Form SS-4; it's just filed not online but by fax or mail, and no Social Security number is required in the responsible party field. This is something I do for clients remotely. More about the process on the Forming an LLC page.
A bank account and Stripe
You don't have to physically fly to the U.S. to open a business account these days. There are fintech solutions and banks that work with non-residents remotely once you have an LLC and an EIN. Setting up Stripe to accept payments is also realistic — with a properly set-up company. This works the same for both Wyoming and Delaware.
Form 5472 + pro-forma 1120 is mandatory
Here's the point where people who skimped on competent support get burned.
If you have a foreign-owned single-member LLC (a U.S. LLC with a single foreign owner, which by default is treated as a disregarded entity), you are required to file Form 5472 together with a pro-forma Form 1120 every year. This is informational reporting on transactions between you and your own company.
The penalty for non-filing or late filing is $25,000. Not a typo: twenty-five thousand dollars for a single form not submitted.
Note: this obligation doesn't depend on the state and doesn't depend on whether the company had a profit. Even a "dormant" LLC with no revenue is required to file 5472 + pro-forma 1120. So when someone tells me "I opened an LLC in Wyoming a year ago and haven't filed anything, there are no taxes there anyway" — this is exactly the risk I check first.
A registered agent and no physical presence
In any state, an LLC is required to have a registered agent — a local representative with a physical address in that state to receive official correspondence. This is a paid service, and it's needed in both Wyoming and Delaware. At the same time, the owner's physical presence in the U.S. is not required — neither to form nor to maintain the company.
Table: Wyoming vs. Delaware through a non-resident's eyes
| Criterion | Wyoming | Delaware |
|---|---|---|
| Cost of formation and annual fees | Low; annual report from ~$60/year | Higher; franchise tax $300/year for an LLC |
| Owner privacy | High; member names not in a public registry | Lower; oriented toward transparency for deals |
| State income tax | None (at the state level) | No tax on LLC income outside Delaware, but there's a franchise tax |
| Attracting VC / U.S. investors | Weaker; restructuring likely | Gold standard; investors expect exactly this |
| Conversion to a C-Corp for a round | Possible, but an extra step | A well-trodden path familiar to lawyers |
| Bank / Stripe for a non-resident | Available | Available |
| Registered agent | Required | Required |
| Form 5472 + pro-forma 1120 | Required, $25,000 penalty | Required, $25,000 penalty |
As you can see, a non-resident's key pain points — EIN, bank, Stripe, 5472, registered agent — are identical in both columns. The differences come down to price, privacy, and "investor-readiness." I've put together a more detailed comparison of all the nuances here — Delaware vs. Wyoming: the full comparison.
A simple rule for choosing
To keep from getting confused, here's a practical one-line rule:
If you're torn over "what if someday I go for investment" — soberly assess the time horizon. Most of my clients at the start are solo entrepreneurs and small e-commerce projects, for whom Wyoming covers all the tasks more cheaply and with less hassle. And moving to Delaware for a specific round, if one actually materializes, is a solvable task — not a reason to overpay for all the previous years.
In brief
How I can help
I'll help you pick a state for your specific goal, form the LLC, and get an EIN remotely — without an SSN and without flying to the U.S. — and then properly put the company on "filing rails," including Form 5472. Submit a request or book a consultation at fintaxes.us — we'll discuss your situation and put together a clear action plan.
*This material is educational in nature and is not individual tax or legal advice. Your situation may have its own specifics; for particular questions, seek a personalized review.*
