If you're a non-resident with an online business, no US employees, no US office and no physical operations in any particular state, Wyoming or New Mexico is usually the better answer than Delaware — and the Delaware recommendation you've read everywhere is mostly advice written for a different kind of company.
Here's the reasoning, including where Delaware genuinely is right.
Why everyone says Delaware
Delaware's reputation is earned, but for reasons that mostly don't apply to you.
Delaware has the Court of Chancery — a specialised business court with judges rather than juries and roughly two centuries of corporate case law. That predictability is enormously valuable if you're a company with sophisticated investors, complex share classes, and a realistic prospect of litigation or acquisition.
That's why US venture capital funds prefer Delaware C-Corps. If you're raising institutional money from American VCs, they will very likely require a Delaware C-Corp, and that consideration overrides everything else in this article.
But most of the Delaware advice online is written for that audience, or by people repeating advice written for that audience, and then read by a solo founder in Karachi or Lagos selling a $29 digital product. Those are different businesses with different needs.
What state choice actually affects
Being precise about this removes most of the confusion.
State choice does NOT affect:
- Your federal tax position. That's determined by federal law, your entity type and elections, and where your income is sourced — not by which state stamped your formation document.
- Your ability to sell to customers anywhere in the US.
- Your ability to open bank accounts, use payment processors, or operate.
- Your home-country tax obligations, which follow your residency, not your company's state.
State choice DOES affect:
- Annual cost — filing fees, franchise tax, registered agent
- Privacy — whether member names appear in public records
- Administrative burden — how many filings and how complicated
- Legal environment — relevant mainly if you expect disputes or institutional investors
For a small online business run from abroad, that's a list about cost, privacy and admin. Not about tax.
The realistic options
Wyoming
The most common choice for non-resident founders, and generally a sound one. Low annual costs, no state corporate income tax, strong LLC statute, member privacy in public filings, and a straightforward annual report. Widely used and widely recognised by banks and processors, which quietly matters — a Wyoming LLC is a familiar object to a US institution.
New Mexico
The cheapest to maintain. Its distinguishing feature is that it has no annual report requirement for LLCs, which removes an annual task and an annual failure mode. Strong privacy. The tradeoff is that it's less familiar to some institutions than Wyoming or Delaware, and less case law surrounds it.
Delaware
Higher annual cost, and the franchise tax structure catches people out — for corporations, the default calculation method can produce alarming figures until you use the alternative method. Genuinely correct if you're raising US venture capital, planning a complex cap table, or expect to be acquired by a US buyer who'll want familiar governance.
Florida, Texas and others
Sometimes recommended for founders with a genuine physical or operational connection to those states. If you have no such connection, they mostly add complexity without benefit.
Your customers' state
Not a factor. You don't form where your customers are.
On current fees: every state changes them. Check the Secretary of State website for the state you're considering rather than relying on any article's table, including this one.
The mistake that costs the most: foreign qualification
Here's the trap that makes "cheap state" advice go wrong.
If your business has a genuine physical presence in a state — an office, employees, inventory in a warehouse, a real operating footprint — you may be required to register as a foreign entity in that state, regardless of where you formed. That means a second registration, a second registered agent, second annual fees, and potentially state tax obligations there.
So a founder who forms in Wyoming for the low fees but keeps inventory in a California warehouse may have a California obligation, and the Wyoming saving evaporates.
For a genuinely location-independent online business with no US physical footprint, this generally doesn't arise — which is exactly why Wyoming or New Mexico works so well for that profile, and why the same advice would be wrong for someone with a US warehouse.
If you have any US physical presence, get advice specific to that state before choosing.
LLC or C-Corp?
Related question, often more consequential than the state.
LLC — simpler, flexible, cheaper to maintain. A single-member LLC owned by a non-resident is typically a disregarded entity for US income tax purposes, which usually means no separate federal income tax at entity level, though the Form 5472 filing obligation applies regardless (see our article on that). Right for most bootstrapped, service, e-commerce and content businesses.
C-Corp — a separate taxpayer, so profits can be taxed at the corporate level and again on distribution. More administration. Required in practice if you're raising from US VCs, and sometimes preferable if you're retaining earnings in the business or planning an equity incentive structure.
For most readers of this article, an LLC is right. If you're planning a US venture raise, talk to a US startup attorney before forming anything — reincorporating later is possible but costs money and time you'd rather not spend.
Privacy: what it does and doesn't mean
Wyoming and New Mexico don't list LLC members in public formation records. That's genuine, and for some founders it matters.
What it doesn't mean:
- Your bank knows exactly who you are. KYC applies regardless of state privacy.
- The IRS knows who you are. Your filings identify you.
- It isn't a shield from liability or obligations. Privacy in a public database is not anonymity from institutions, and anyone selling "anonymous LLCs" as a way to be untraceable is selling a fantasy — usually to people whose reasons for wanting it aren't good ones.
On BOI reporting, worth knowing: under FinCEN's March 2025 interim final rule, entities created in the United States are currently exempt from beneficial ownership reporting, with the requirement narrowed to entities formed under foreign law that register to do business in a US state. That's the position as of mid-2026, it's an interim rule, and it has reversed before — [VERIFY CURRENT at fincen.gov] before relying on it either way.
Can you change states later?
Yes. Options include domestication/conversion (where both states permit it — the entity moves and generally keeps its EIN and history), or forming fresh and migrating operations, or registering as a foreign entity in the new state while keeping the original.
It's all doable and it all costs money and time. Which is the argument for getting it roughly right at the start — while also not agonising, because none of these choices is catastrophic.
A practical decision path
- Raising from US VCs? → Delaware C-Corp. Talk to a startup attorney.
- Any US physical presence — office, employees, inventory? → Likely form in or register in that state. Get state-specific advice.
- Online business, no US footprint, want lowest ongoing admin? → New Mexico.
- Online business, no US footprint, want the best balance of cost, familiarity and recognition? → Wyoming. This is where most non-resident founders land, and reasonably.
Should you do this yourself?
Formation is genuinely DIY-able. Every state lets you file directly on its website, and you'll pay the state fee and nothing more. You'll still need a registered agent in the state — that's a real requirement and a real annual cost, typically modest.
Do it yourself if: single-member LLC, no US presence, comfortable with a web form and a fax for the EIN.
Get help if: multiple members with different rights, an entity election, a US physical footprint, or you want the formation, EIN, address and banking prepared as one sequence rather than four separate learning exercises.
Be aware of what formation packages actually cost. The state fee is public. Anything above it is service — which can be entirely worth it, but you should know which part is which.
What we do
We form the entity, obtain the EIN, and prepare what comes next — priced publicly. We'll recommend Wyoming for most people reading this, New Mexico if minimum ongoing admin is the priority, and Delaware if you tell us you're raising from US investors.
If you'd rather file it yourself for the state fee, that's a completely reasonable choice and we'll tell you so.
For the broader picture on this topic, see LLC vs C-Corp for Uae founders. For the broader picture on this topic, see the Uk entity decision guide. Canadian founders choosing a US LLC structure should also read the guide on opening a US business bank account from Canada once the entity is formed. For more context, see LLC vs C-Corp for Argentinian founders. For more context, see LLC vs C-Corp for Australian founders. For more context, see LLC vs C-Corp for Austrian founders.