Is Delaware the Best State to Form an LLC as a Non-U.S. Resident?

Any quick Google search for the best state to start a U.S. company will inevitably present you with lists featuring Delaware in the top slot. Delaware dominates as the prime location for new business thanks to its business-friendly courts and strong privacy protections.

That said, non-U.S. residents would be wise to consider the pros and cons, as well as other popular state options, before jumping on the Delaware bandwagon.

Looking for options besides Delaware for your business formation? Our chief product officer, Gib Olander, recently covered a few more of the top alternatives to Delaware for business formation that might sway you away from The First State in favor of another.

Pros and cons for non-U.S. citizens starting a Delaware LLC

Forming a Delaware LLC may be at the top of Google’s list of best companies to form as a non-U.S. citizen looking for easy and affordable registration, but the reasons why aren’t always made clear.

Delaware’s Court of Chancery has weakened Delaware’s perception as a business-friendly state in recent years with prominent cases like Richard J. Tornetta v. Elon Musk et al. and Sjunde Ap-Fonden v. Activision Blizzard et al. ending in decisions that lean heavily in favor of plaintiffs in lawsuits targeting businesses and their owners.

Does Delaware feel like the right state for you despite its cons? Northwest can help you with your next steps. Hire us to register your new Delaware LLC today.

Alternative states to consider for your U.S. LLC formation

Delaware isn’t your only option if you’re looking to break into the U.S. market. Several states offer benefits similar to Delaware and are slowly becoming the better states to form in as a non-U.S. citizen.

Wyoming

Like Delaware, Wyoming is a state that values privacy for business owners. Working with a registered agent or attorney to form your Wyoming LLC can ensure that only the registered agent’s address information is publicly visible, along with the name of the organizer of your business, or the individual or entity submitting the formation or annual reporting documents.

Along with this, Wyoming boasts LLC charging order benefits like Delaware. Basically, this means that debts owed by an individual member can’t result in the LLC itself being handed over to the individual or entity to which the debt is owed, preventing all the members from paying for issues isolated to only one.

Wyoming also has lower annual reporting fees than Delaware, which works out well for new startups looking to raise capital.

New Mexico

Like Delaware and Wyoming, LLC member names are hidden from public view on New Mexico’s public business search. This level of privacy has become more crucial over time as business owners aim to reduce the spotlight on individual LLC owners.

In addition, New Mexico one-ups Wyoming by not requiring LLCs to file annual reports whatsoever. This reduces initial NM LLC formation and long-term business maintenance expenses, eliminates the risk of failure-to-file penalties, and reduces administrative burdens for small operations.

Coming to America

With the changing landscape in Delaware and its weakening status as the judicial authority for businesses in the U.S., coming to America as a business may require more state research than before.

That said, plenty of states like Wyoming and New Mexico welcome businesses from all over the globe, and your new LLC may find itself right at home without Delaware’s reputation factoring in.