Ask the internet where to form an LLC and you will hear “Delaware” within about four seconds. Ask why, and the answers get vague fast — something about courts, something about privacy, something about what the big companies do. Delaware is an excellent place to form a company. It is just rarely the right answer for a business with one location, three clients and no investors.
The reason has nothing to do with Delaware and everything to do with a rule that almost never makes it into the recommendation.
The rule that decides this for most people
Forming a company in one state does not give you permission to operate in another. If you form in Delaware but run the business from Florida, Florida’s position is that you are a foreign LLC doing business in Florida, and you have to register with Florida too. That registration is called foreign qualification, and it is not a formality you can quietly skip.
So you do not get to choose between Delaware and Florida. You get to choose between Florida alone, and Delaware plus Florida. Two filings, two registered agents, two annual obligations, forever.
What that actually costs
A Florida-based owner who forms in Florida pays $125 to form and $138.75 a year after that. The same owner who forms in Delaware pays $110 + $125 to form — Delaware, then the Florida registration — and then $400 + $138.75 = $538.75 every year, to two states, for the rest of the company’s life. Before either registered agent sends a bill.
That is roughly four hundred dollars a year, indefinitely, in exchange for benefits we will get to in a moment — benefits that are real, and that most small businesses cannot use.
What the three states actually cost
Every figure below came off the state’s own site in September 2026. Third-party round-ups go stale quickly, and two of these numbers changed this year.
| Delaware | Wyoming | Florida | |
|---|---|---|---|
| To form | $110 | $100 | $125 |
| Every year | $400 | $60 minimum | $138.75 |
| What that is | Annual LLC tax. No annual report at all. | Annual report and license tax. | Annual report. |
| Due | 1 June | First of your anniversary month | 1 May |
| If you are late | $200, plus 1.5% a month | Nothing — see below | $400, never waived |
| If you keep ignoring it | Loses good standing | Dissolved 60 days after the due date | Dissolved on the fourth Friday of September |
| Owner names public? | No | No | Yes, every year |
Florida’s $125 is a $100 filing fee plus a $25 registered agent designation. Florida publishes at least one manager or managing member with every annual report. Wyoming’s $60 is a minimum, not a flat fee — it is the greater of $60 or two-tenths of a mill on assets located in Wyoming, which starts to bite above roughly $300,000 of Wyoming assets. Delaware’s annual tax rose from $300 to $400 under legislation signed in May 2026, and as of this writing several pages on Delaware’s own site still show $300, so confirm it before you budget it.
Delaware: what it is genuinely for
Delaware’s advantage is its Court of Chancery — a court with no juries, judges who do nothing but business law, and a couple of centuries of decided cases behind them. If you are negotiating with a venture fund, the fund will very likely require Delaware, and it will not be negotiable. Lawyers on both sides of a deal already know the law, which makes the deal cheaper.
Delaware also asks for remarkably little. No annual report for LLCs at all — just the $400 tax and a registered agent with a Delaware street address. Members and managers never appear in the public record.
The tell is whether anyone is going to buy equity in your company. If institutional money is coming, form in Delaware and stop reading. If it is not, you are paying for a courtroom you will never see.
Wyoming: the privacy argument, examined
Wyoming is cheap and it is quiet. No member or manager list in the formation document, none in the annual report, and the asset worksheet behind the annual report is expressly not a public record under state law. The annual report costs $60 for a company with no Wyoming assets.
The catch is that privacy from a state database is not privacy from anyone who matters. Your bank will still ask who owns the company — it has to, and we wrote about exactly what it will ask for. Your landlord will ask. A plaintiff who sues you will get the answer in discovery. What Wyoming buys you is a slightly quieter public record, and the cost is a second annual filing if you operate somewhere else.
Wyoming has one trap worth knowing: it does not fine you for filing late. It dissolves you. The report is due on the first day of your anniversary month, and the state administratively dissolves the company sixty days after that. There is no escalating late fee to nag you about it.
Your home state: the boring answer that is usually right
If you live in one state, work in one state, and your customers are in one state, forming there is almost always correct. One filing. One agent. One deadline. One annual fee. Nothing to reconcile.
The counter-argument is usually about taxes, and it is usually wrong. An LLC does not pay federal income tax; you do, on your personal return, in the state where you live. Forming in a state with no income tax does not move your income there. Where you live and work does that.
The penalty for guessing wrong
Florida’s consequences for transacting business without qualifying are worth reading twice: the company may not bring or maintain a lawsuit in Florida, it owes every fee it should have paid, and it owes a civil penalty of $500 to $1,000 for each year it operated unregistered. Contracts you signed stay valid — but you may find you cannot go to court to enforce one.
The three cases where forming elsewhere genuinely wins
- You are raising institutional money. Form in Delaware. The fund will ask for it and the conversion later costs more than doing it now.
- You have no US presence at all. If you live abroad and the company has no physical operations in any state, there is no home state to default to, and the choice really is open. Delaware and Wyoming are both reasonable; Wyoming is cheaper and quieter, Delaware is more recognizable to US banks and counterparties.
- You hold real estate in that state. Property is the clearest case of doing business somewhere. An LLC that owns a building in Wyoming belongs in Wyoming, and many investors form a separate LLC per property for exactly this reason.
Notice what is not on that list: saving money, staying private, or avoiding taxes. Those are the three reasons people usually give, and they are the three that do not survive the arithmetic.
How to settle it in four questions
Is institutional money coming, in the next two years?
If yes, Delaware. Done. The rest of this does not apply to you.
Where will the work physically happen?
Where you sit, where your employees sit, where your inventory is, where the property is. That state will want you registered whatever you do elsewhere.
Would forming elsewhere mean registering twice?
Almost certainly yes if you answered a single state above. Add up both states’ annual costs before you decide the second one is worth it.
Is the reason you want another state on the short list above?
If it is not — if the reason is privacy, or taxes, or that a video said so — form at home and spend the four hundred dollars a year on something that grows the business.
One more thing, whichever you choose: put the annual deadline in a calendar the day you form. Florida’s $400 late fee is not negotiable and cannot be waived, and Wyoming will not warn you before it dissolves the company. Every one of these states assumes you are keeping track.
Sources
- Delaware Division of Corporations — annual tax instructions and the fee schedule revised 1 August 2026. Increase enacted by House Bill 400, signed 21 May 2026.
- Wyoming Secretary of State — business fee schedule effective 1 July 2026, business FAQ, and the annual report license tax rules (W.S. 17-29-209).
- Florida Division of Corporations — LLC fee schedule and annual report pages, sunbiz.org. Foreign qualification and its penalties: Fla. Stat. ss. 605.0902, 605.0904 and 605.0905.
- All figures checked 9 September 2026.