Wyoming LLC vs. Delaware and New Mexico: Why Wyoming Reigns Supreme for Non-Residents
"Wyoming beats Delaware and New Mexico for foreign-owned LLCs on cost, privacy, and simplicity. Plus the IRS filing nobody tells you about."
When you're forming a U.S. LLC as a non-resident, three states come up every time: Wyoming, Delaware, and New Mexico. They all work. But Wyoming wins for most foreign owners, and it's not close.
Here's why — and what nobody tells you about the other two.
The Delaware Franchise Tax Trap
This catches thousands of people. Delaware charges a $300 annual franchise tax. Miss it and they hit you with 1.5% monthly interest plus penalties. They don't send reminders.
Real example: Jennifer, a Texas entrepreneur, formed a Delaware LLC in 2020. Three years later, Delaware sent her a demand for $1,890 — $900 in back taxes plus $990 in penalties and interest. They threatened to dissolve her LLC within 30 days.
This can't happen in Wyoming. There's no franchise tax. Just a $60 annual fee. Done.
Why Wyoming Wins
Privacy. Wyoming doesn't require LLC owners in public records. Only your registered agent shows up. Delaware is decent on privacy. New Mexico isn't — public records requests can expose your information.
Cost. $100 to form, $60 per year. That's it. Delaware runs $110 to form and $300 per year. New Mexico is $50 to form with no annual fee, but you pay for it in other ways.
No state taxes. No income tax, no corporate tax, no franchise tax, no inventory tax.
Legal framework. Wyoming created LLC legislation in 1977 — they've been at this longer than anyone. Strong charging order protection, flexible operating agreements, minimal compliance requirements.
Head-to-Head
| Feature | Wyoming | Delaware | New Mexico |
|---|---|---|---|
| Formation cost | $100 | $110 | $50 |
| Annual cost | $60 | $300 | $0 |
| Privacy | Excellent | Good | Limited |
| State income tax | None | None | Yes |
| Franchise tax | None | $300/yr | None |
| Legal precedent | Strong | Strong | Limited |
When the Others Make Sense
Delaware — if you're raising venture capital or building a complex multi-member entity. VCs and their lawyers are comfortable with Delaware corporate law. For a single-member LLC owned by a foreign person, this doesn't matter.
New Mexico — if cost is literally your only concern and you don't care about privacy. But the savings are minimal ($60/year vs $0) and the privacy trade-off isn't worth it for most people.
How to Form Your Wyoming LLC
- Pick a unique LLC name
- Choose a Wyoming registered agent
- File Articles of Organization ($100)
- Get an EIN from the IRS
- Pay the $60 annual license tax
Most formation services (Northwest Registered Agent, LegalZoom, IncFile) handle this for $100-200 plus the state fee.
What They Don't Tell You After Formation
Here's the part every formation company skips. Once your foreign-owned LLC exists, the IRS requires you to file Form 5472 every year — even if the LLC has zero income. Even if it's dormant. The penalty for not filing is $25,000 per year.
This applies whether you formed in Wyoming, Delaware, or New Mexico. The state doesn't matter — the IRS filing requirement is federal.
Form 5472 reports transactions between your LLC and its related parties — that includes you as the owner. Capital contributions go in Part V. Even the money you paid to form the LLC is reportable. If a transaction category totals $50,000 or less, there's a simplified reporting option.
The form can't be e-filed — it has to be mailed or faxed with a wet-ink signature. If you need more time, you can file an extension to push the deadline to October 15.
The Bottom Line
Wyoming gives you the best combination of privacy, cost, and legal protection. But choosing the right state is only half the battle. Staying compliant with the IRS is what keeps your LLC alive. A simple Excel bookkeeping template to track your transactions throughout the year makes filing painless.
Whether your LLC is for Amazon FBA, U.S. rental property, or freelancing — MyFreeTaxAmerica.com walks you through the entire Form 5472 step by step. Check our FAQ for the basics, or go straight to filing. Our Premium Package includes a full professional review before submission.
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This article is for informational purposes only and should not be considered legal or tax advice. Consult qualified professionals regarding your specific situation.