Delaware vs Wyoming vs Texas: Which State Should You Form Your LLC In?

A practical guide for non-US founders choosing the right US state for their LLC.

Every week, I get some version of this question from non-US founders:

“Does the state actually matter?”

The short answer:

Yes. But probably not for the reasons people think.

Because once you start researching US LLCs, the internet turns into a battlefield:

• “Delaware is the only serious option.”
• “Wyoming is the cheapest.”
• “Texas has no income tax.”

Half the advice is written for US residents. The other half sounds like legal fan fiction.

So here’s the real comparison, without the noise.

Why choosing the right state matters

As a non-US founder, you’re not tied to a specific state geographically.

You’re choosing based on strategy.

The things that actually matter are:

• Formation costs
• Annual maintenance fees
• Privacy
• Investor expectations
• Long-term business goals

That’s it.

Delaware

Delaware is the default choice for venture-backed startups.

There’s a reason more than 60% of Fortune 500 companies are formed there.

It’s not hype. It’s infrastructure.

Why founders choose Delaware

1. Investors prefer it

If you plan to raise money from US investors, Delaware is the gold standard.

VCs, accelerators, and startup lawyers already know the system.

That familiarity matters more than people realize.

2. Delaware has a specialized business court

The Delaware Court of Chancery handles business disputes only.

That means:

• predictable outcomes
• decades of legal precedent
• faster corporate case handling

Investors love predictability.

3. Strong credibility

Certain US banks, partners, and accelerators simply trust Delaware entities more.

Especially in tech.

Delaware makes sense if:

• You plan to raise funding
• You want to apply to Y Combinator
• You’re building a scalable startup
• You want maximum investor familiarity

Wyoming

Wyoming is the favorite among lean founders.

Simple. Affordable. Low maintenance.

This is where a lot of global founders end up.

Why founders choose Wyoming

1. Lower annual costs

Wyoming’s annual fee is dramatically lower than Delaware’s.

That matters if you’re bootstrapping.

2. Strong privacy

Wyoming does not publicly require member names in the same way many states do.

A lot of founders care about this more than they admit.

3. Strong LLC protection

Wyoming has a reputation for being very LLC-friendly legally.

Wyoming makes sense if:

• You run an agency
• You sell services
• You run e-commerce or SaaS
• You don’t plan to raise VC money soon
• You want lower ongoing costs

Texas

Texas gets mentioned constantly because it’s huge, business-friendly, and recognizable.

But for non-US founders, Texas is often misunderstood.

Why people consider Texas

1. No state income tax

This attracts attention immediately.

But remember: Your tax situation depends on far more than just the state.

2. Strong business reputation

Texas has a large economy and a pro-business image.

Certain industries especially like Texas-based businesses.

3. Local business connections

If your customers, partners, or operations are already in Texas, forming there can make sense.

Texas makes sense if:

• You already operate in Texas
• You have Texas clients or partners
• Your business activity is tied to the state

When Texas does NOT make sense

If you have no connection to Texas, the higher formation fee usually isn’t worth it.

For many non-US founders:

• Wyoming is cheaper
• Delaware is better for fundraising

Texas sits somewhere in the middle.

My recommendation for most global founders

Planning to raise money? → Delaware.

Running a service business or agency? → Wyoming.

Already connected to Texas operationally? → Texas can work.

Most founders spend weeks obsessing over the state choice when the bigger issue is usually:

• choosing the wrong entity type
• setting things up incorrectly
• ignoring compliance afterward

That’s what actually causes problems.

This article is for informational purposes only and does not constitute legal or tax advice.