Foreign founders often choose between forming their U.S. company in Wyoming or Delaware. Both states are known for being business-friendly, but many entrepreneurs are confused about whether they will owe state taxes.
The good news is that neither Wyoming nor Delaware requires state income tax for LLCs owned by non-U.S. residents. But that does not mean there are no state-level obligations.
Both states charge annual fees to keep your company in good standing, and missing them can cause your LLC to be dissolved.
This article explains what foreign-owned LLCs need to pay in Wyoming and Delaware, how these fees work, and how they differ from federal IRS requirements.
Wyoming state obligations
Wyoming does not have a state income tax. Instead, it charges an annual report and franchise tax. Every Wyoming LLC must file this report each year by the first day of the anniversary month of formation. The fee is based on assets located in Wyoming, with a minimum payment of $60.
Even if your LLC had no income, no transactions, or no U.S. activity, you still owe this fee. In practice, this franchise tax is Wyoming’s substitute for a state income tax—a flat fee to remain registered each year.
Failing to file the annual report or pay the fee can cause your Wyoming LLC to fall out of good standing and eventually be administratively dissolved.
Delaware state obligations
Delaware also does not have a state income tax for LLCs. Instead, Delaware requires an annual franchise tax and an annual report. For LLCs, the franchise tax is a flat $300 fee, due by June 1 each year.
Corporations in Delaware have a different system that can be more expensive, but for LLCs, the fee is fixed regardless of income or activity.
Just like Wyoming, this fee applies even if your LLC had no revenue or operations. Failing to pay can result in penalties and your Delaware LLC being dissolved.
How state taxes differ from federal filings
It’s important to understand that Wyoming’s $60 fee and Delaware’s $300 fee are state franchise taxes, not federal income taxes. They do not replace your obligation to file with the IRS. If your LLC is foreign-owned, you still must file:
- Form 5472 with a pro forma 1120 for a single-member LLC.
- Form 1065 for a multi-member LLC.
- Form 1120 (with 5472 if foreign shareholders are involved) for corporations.
These IRS filings are required regardless of whether you choose Wyoming or Delaware.
Which state is better for foreign founders?
Wyoming is often favored for its lower costs—the $60 fee is cheaper than Delaware’s $300 fee. Wyoming also has strong privacy protections and a simple filing system.
Delaware, however, is preferred by venture capitalists and investors, especially for startups planning to raise funding, because of its well-developed corporate law system.
If cost and simplicity are your priorities, Wyoming is often the better choice. If you expect to raise outside capital, Delaware may be worth the higher fee.
Example: Two LLCs in different states
A founder in Mexico forms a Wyoming single-member LLC in March. Her compliance obligations include filing a Wyoming annual report by March 1 each year and paying at least $60. She must also file Form 5472 with a pro forma 1120 with the IRS by April 15.
Another founder in Germany forms a Delaware single-member LLC in June. His compliance obligations include filing Delaware’s annual franchise tax by June 1 and paying $300. He must also file Form 5472 with a pro forma 1120 with the IRS by April 15.
Neither founder owes state income tax, but both owe their state’s franchise fee plus their federal IRS filings.
How Bookmate helps
Bookmate focuses on federal IRS filings, not state franchise taxes. We:
- File Form 5472 with pro forma 1120 for foreign-owned single-member LLCs.
- File Form 1065 with K-1s, K-2s, and K-3s for multi-member LLCs.
- File Form 1120 with 5472 attached for corporations.
For state filings, most founders handle the annual report and franchise tax directly through Wyoming’s or Delaware’s online portal, or through their registered agent. We guide clients on what’s required but do not process state reports ourselves.
Final thoughts
Foreign-owned LLCs in Wyoming and Delaware do not owe state income tax, but both states require annual franchise taxes to remain in good standing. Wyoming charges a minimum of $60, while Delaware charges $300. These are not optional—they apply even if your company had no revenue or activity.
At the federal level, the IRS still requires filings such as Form 5472, 1065, or 1120 depending on your entity type. Choosing Wyoming or Delaware only changes the state-level fees, not the IRS requirements.
Bookmate helps foreign founders handle the federal side of compliance so they can avoid penalties and focus on building their businesses.
Learn more at trybookmate.co or book a consultation today.
