Wyoming's charging order protection is exclusive by statute, meaning a creditor is legally limited to a lien on distributions and cannot force the LLC to dissolve or liquidate assets. Delaware offers no such statutory exclusivity, which is a meaningful difference in a real lawsuit.
Delaware LLC
Delaware is the default choice for venture-backed startups and companies that expect institutional investors, because most VC funds and law firms require Delaware entities. The Court of Chancery gives you predictable, case-law-heavy dispute resolution, which sophisticated capital demands. Formation costs around $90 in state fees plus registered agent fees of roughly $50 to $200 per year, and the annual franchise tax runs $300 minimum but can climb sharply for larger entities. Delaware does not require public disclosure of member names, but it has no charging order exclusivity, meaning a creditor may be able to pursue dissolution in addition to a charging order against your interest.
Wyoming LLC
Wyoming gives you stronger asset protection mechanics than Delaware on two fronts: it has a statutory charging order as the exclusive remedy for creditors, meaning a creditor cannot force dissolution or liquidation of the LLC to satisfy a judgment against a member. Wyoming also imposes no state income tax and no franchise tax, keeping annual maintenance costs to a $60 annual report fee. Formation costs roughly $100 in state fees. For a holding company, a real estate vehicle, or a privacy-first structure where you have no need to court institutional investors, Wyoming is the cleaner setup. For a deeper look at how the Wyoming LLC fits into a broader structure, Types of Wyoming LLC: Which Structure Actually Fits Your Setup breaks down the variants in detail.
Things people ask first.
Which state is better for a single-member LLC?
Wyoming. Single-member LLCs in Delaware are more exposed in litigation because courts in other states have sometimes pierced the charging order protection for single-member entities. Wyoming's statute is more explicit and has held up more consistently.
Do I need to live in Wyoming or Delaware to form an LLC there?
No. You can form an LLC in either state as a non-resident and non-citizen. You will need a registered agent with a physical address in the formation state, which typically costs $50 to $200 per year depending on the provider.
If I form a Wyoming LLC but operate in California, do I owe California taxes?
Yes. If you are doing business in California, California will require you to register as a foreign LLC and pay the $800 minimum franchise tax regardless of where the entity was formed. The formation state does not determine where you owe tax.
Which state do VCs prefer?
Delaware, almost without exception. Most institutional investors and accelerators require a Delaware C-Corp or occasionally a Delaware LLC. Pitching a Wyoming entity to a VC fund will typically trigger a conversion request before they proceed.
Can I use a Wyoming LLC as a holding company that owns a Delaware operating company?
Yes, and this is a common structure. The Wyoming entity holds the membership interests in the Delaware operating company, giving you asset protection at the holding layer while keeping the operating entity investor-friendly.
Is Wyoming or Delaware more private?
Wyoming. Wyoming does not require member or manager names to appear in publicly filed documents, and the annual report asks only for the registered agent and principal office address. Delaware also keeps member names off public filings, but Wyoming's overall disclosure requirements are lighter.
Want to know how a Wyoming or Delaware LLC fits into a full offshore stack?
The Offshore Playbook maps out how domestic LLC layers connect to offshore holding structures, banking, and tax residency so you can see the whole picture before you commit to a formation. Gramps.chat can walk you through the specifics for your situation in real time.
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