State of formation — Delaware vs Wyoming vs Nevada vs home state

Status: research-only. Nothing here is legal or tax advice. Before choosing a state of formation, consult a business-formation attorney licensed in both the state you're considering and your home state of operation.

Last updated: 2026-04-22. State filing fees, annual-report fees, and franchise-tax minimums change — verify on the relevant Secretary of State site at decision time.

Open question blocking finalization: the user's home state is not yet stated. The home-state column in this doc must be filled in before this comparison is actionable. See the "Questions for the user" section at the bottom.

TL;DR

For a solo operator who lives and works in one state, forming in the home state is usually both cheapest and simplest — the "form in Delaware to save money" argument mostly benefits VC-backed startups and businesses with substantial out-of-state presence. Forming in Delaware, Wyoming, or Nevada while operating in the home state typically triggers foreign qualification in the home state, meaning the user pays two filing fees, two annual reports, and two registered-agent contracts — the "double-filing trap." This doc lays out each option with real fees so the attorney conversation can focus on the few cases where the tradeoff actually favors out-of-state formation (IP isolation in a holding LLC, pending VC round, specific asset-protection posture).

The double-filing trap

General rule: an LLC or corporation is organized in one state (the "state of formation" or "domestic" state) but if it transacts business in another state, it must register to do business there too — called foreign qualification. Foreign qualification fees and annual-report obligations mirror those of domestic entities in the foreign state, and the entity must maintain a registered agent in both states. The exact threshold for "transacting business" varies by state but typically includes: having a physical office, employing someone in-state, or regularly entering into contracts in-state. Operating a SaaS business remotely while physically living in the state generally qualifies. Confirm with an attorney in your home state.

Practical implication: if you form an LLC in Delaware ($300/year LLC tax) but operate in, e.g., California ($800/year minimum franchise tax), you pay both. The "form elsewhere" savings rarely materialize for small operators.

Facts (with citations)

Delaware — LLC

• Annual LLC tax: $300 flat, due June 1 each year. Penalty for non-payment: $200 plus 1.5%/month interest. (Delaware Division of Corporations [1])
• Annual report: Delaware LLCs do not file an annual report. (Delaware corporations do — filing fee $50 for domestic non-exempt, $25 exempt, due March 1. [1])
• Formation fee: Certificate of Formation filing fee — published on Delaware's corporate fee schedule; the archived fee as of 2025 reference was $90 base for LLC formation (verify on current fee schedule [2]).
• Registered agent: required in Delaware; must have a Delaware street address. Third-party RA services typically $50–$300/year.
• Why Delaware is famous: the Delaware Court of Chancery has centuries of case law on corporate governance, and institutional investors default to Delaware C-Corps. For an LLC without outside investors, most of Delaware's advantages do not apply.

Delaware — Corporation (C-Corp)

• Annual franchise tax: computed under either the Authorized Shares method (minimum $175) or the Assumed Par Value Capital method (minimum $400); maximum $200,000 except for Large Corporate Filers. [1]
• Annual report: required; filing fee $50 domestic non-exempt ($25 exempt), due March 1. Penalty for late-filing: $200 plus 1.5%/month interest. [1]
• Quarterly installments required if annual tax exceeds $5,000 (40% June 1, 20% Sept 1, 20% Dec 1, 20% March 1). [1]
• Formation fee: Certificate of Incorporation filing fee — verify on fee schedule [2].

Wyoming — LLC

• Annual report: required, due the first day of the anniversary month of formation. Minimum annual fee: $60 (License Tax — "greater of $60 or $0.0002 per dollar of assets located in Wyoming" per Wyoming SOS). Verify current amount and formula on the Wyoming SOS fee schedule (direct scraping of the Wyoming SOS fee-schedule PDF failed for this research run — the WyoBiz e-filing system was intermittently down and the PDF URL returned 404 at time of research; the $60 figure is the long-standing minimum but must be confirmed). [3]
• Formation fee: Articles of Organization filing fee — $100 has been the long-standing figure per Wyoming SOS; verify current amount at filing time [3].
• Registered agent: required in Wyoming; must have a Wyoming physical address. Commercial registered agent services starting ~$50–$150/year.
• Why Wyoming is popular: no state income tax; strong LLC charging-order protection; lower annual fees than Delaware for the inactive or small LLC. Popular as a holding-LLC jurisdiction. Same double-filing trap applies if you operate elsewhere.

Nevada — LLC

• State Business License: required annually, $200/year (has been the long-standing figure — verify). [4]
• Annual List of Managers/Members: required annually, $150 has been the long-standing figure. [4]
• Formation fee: Articles of Organization — $75 base; has been the long-standing figure. [4]
• Combined annual burden: often cited at ~$350/year (List + Business License) versus Wyoming's ~$60 and Delaware's $300. Verify exact current fees with the Nevada Secretary of State — the nvsos.gov page returned dynamic content the research could not scrape cleanly [4].
• Why Nevada is sometimes chosen: no state income tax; strong liability-protection statutes; aggressive marketing to out-of-state founders. The cost premium versus Wyoming is meaningful for a small operator, and the double-filing trap applies if you operate elsewhere.

Home state — LLC

• Annual report + franchise-tax fees: vary enormously by state. Examples commonly cited (verify each with the relevant state SOS / Department of Revenue):
• California: $70 initial filing, $20 biennial report, $800/year minimum franchise tax (LLC fee). [CA FTB — not fetched in this research run; verify at https://www.ftb.ca.gov/.]
• Texas: $300 filing; no franchise tax below the $2.47M no-tax-due threshold (2024–2025 figures; verify current). [TX Comptroller — verify.]
• Florida: $125 filing; annual report $138.75. [FL Division of Corporations — verify.]
• New York: $200 filing + publication requirement costing $600–$2,000 depending on county; biennial report $9. [NY Department of State — verify.]
• No double filing if you only form and operate in your home state. This is the pattern's chief advantage.

Options compared

Jurisdiction flags

• Franchise tax variance. California's $800 LLC minimum franchise tax is often cited as the highest in the country. Texas, Florida, and most no-income-tax states charge far less. Home-state matters more than most founders realize.
• Foreign qualification threshold. Check the "doing business" statute in your home state. A remote-only SaaS with no employees might theoretically not require foreign qualification of an out-of-state entity, but the conservative practice is to foreign-qualify anyway to avoid later penalties.
• Registered agent cost. For each state where the entity is registered (domestic or foreign), a registered agent with a physical in-state address is required. DIY is possible if you reside in the state; otherwise budget $50–$300/year per state for a commercial RA service.
• Privacy. Delaware, Wyoming, and Nevada allow more owner anonymity than most home states. This may matter for some founders and not others.
• FinCEN Beneficial Ownership Information (BOI) report. Under the Corporate Transparency Act, most LLCs and corporations formed in the US must report beneficial ownership information to FinCEN. The IRS's EIN-online page references this requirement [5]. Current enforcement status has been volatile — verify whether the BOI report is currently required for a new entity at formation time with your attorney.

Timing / deadlines

• Delaware LLC annual tax: due June 1 annually [1].
• Delaware corporation annual report + franchise tax: due March 1 annually [1].
• Wyoming annual report: due first day of the anniversary month of formation [3].
• Nevada annual List + Business License: due last day of the anniversary month of formation [4].
• Home state: to be filled in once the user states their home state.

User's stated situation (as of 2026-04-22)

• Primary residence: Pennsylvania
• Tax domicile: Pennsylvania (confirmed by user 2026-04-22)
• Secondary residence: California (owns a house there)
• Days-in-CA: ~<180/year (confirmed by user 2026-04-22). Pattern: quarterly trips of a few weeks each + holidays. Rough estimate ~60–100 days/year, well below the 183-day statutory-resident threshold.
• Product work: some Raxx operational work likely happens from the CA house during stays (solo founder, realistically can't fully unplug for multi-week periods)
• Raxx was initially built physically in CA (confirmed by user 2026-04-22). Primary ongoing work is now remote from PA, but the product's origin work + continuing quarterly CA stays means the business has a CA-touching history and an ongoing CA footprint.

PA domicile takes Scenario C (de-facto CA resident) off the table unless the user explicitly takes steps to change domicile (DL, voter reg, filed-return state). The remaining question is narrowed to: "does the CA house cause CA nexus for the business even though the person is domiciled in PA?"

The dual-residency / CA statutory-resident trap to know about

PA domicile is a strong but not absolute shield. California considers a person a statutory resident (taxed by CA on worldwide income, same as a full resident) if both:

1. Spends more than 9 months (>183 days) of the taxable year in CA[CA-4], AND
2. Maintains a permanent place of abode in CA (owning the CA house = yes)

CA is among the most aggressive states for claiming statutory residency on "snowbirds" with secondary homes. The >183-day count is per calendar year. If the user spends <183 days/yr in CA, PA domicile holds and CA cannot claim him as a resident — they can only tax CA-source income.

This is distinct from business nexus: the LLC can still owe CA franchise tax even if the owner is a PA resident, if operational work happens from CA.

PA vs CA vs DE for this specific profile

The CA "doing business" trap

California Revenue & Taxation Code §23101(b) defines "doing business" more broadly than registration. The Franchise Tax Board (FTB) captures any entity that is any of:

• Organized or commercially domiciled in CA
• Has CA sales exceeding the lesser of $500k or 25% of total sales (2025 threshold: $757,070)[CA-1]
• Has physical presence in CA — office, employee, contractor, inventory, including a remote worker or owner working on the business from inside CA[CA-3]

Work performed from the CA house on Raxx — emails, commits, customer calls — triggers the physical-presence nexus regardless of entity state of formation.

The Delaware myth for this profile

Delaware is correctly described as "awesome" for: - VC-backed C-Corps (institutional investors require DE for portfolio consistency) - Businesses needing DE Court of Chancery jurisprudence (complex equity, multi-shareholder disputes) - Publicly-traded or IPO-path companies

Delaware is actively expensive for the user's profile (solo, self-funded, pre-revenue) because: - DE LLC franchise tax: $300/yr - + CA franchise tax: $800/yr (triggered by CA nexus above) - + CA foreign-qualification filing + ongoing compliance - Total first-year cost ~$1,170+, ongoing ~$1,100/yr, for zero upside unless VC is imminent

A PA LLC or CA LLC at similar operational footprint avoids the double franchise and the foreign-qualification paperwork.

The remaining question: business nexus from multi-week CA stays

Personal side is resolved: PA domicile + <183 days in CA = PA resident for income tax, CA can only tax CA-source income (if any). No statutory-residency claim available to CA.

The only remaining question is whether the LLC itself has CA physical-presence nexus from the quarterly multi-week stays.

CA FTB defines "doing business" as being "actively engaged in any transaction for the purpose of financial gain or profit" in CA. The FTB examines:

• Is the CA location used to manage or operate the business (not incidental)?
• Are customer-facing activities (sales calls, contracts, service delivery) performed from CA?
• Are decisions central to the business made from CA?

The case law is grey around incidental-vs-operational work. A founder who checks email on vacation probably doesn't trigger nexus. A founder who runs quarterly stays where the business is operated (commits pushed, customer calls taken, contracts negotiated, support handled) probably does.

For a solo founder on recurring multi-week stays, the honest CPA answer is usually: assume nexus triggers, budget the $800/yr CA franchise tax as cheap audit insurance. $800/yr is small compared to the cost of an FTB audit that retroactively claims years of unreported nexus with penalties and interest.

The "product built in CA" factor

User confirmed Raxx's initial work was performed physically in CA before the remote-to-PA shift. FTB has two tests that both matter here:

1. "Doing business" nexus (forward-looking): ongoing quarterly CA stays + any operational work during them = nexus going forward, per the analysis above.
2. "Commercially domiciled" in CA (historical + cumulative): where the business's management and control has actually occurred. A business built in CA, even one now operated primarily from PA, can plausibly be argued commercially domiciled in CA depending on the weight of historical vs current activity. The commercial-domicile test is separate from and broader than current physical-presence nexus.

For a pre-revenue solo SaaS the retroactive audit risk is small (FTB tends to chase revenue, not hobbies), but the existence of CA-origin work removes most of the daylight for a "no CA nexus" characterization of the business going forward. Scenario A' becomes harder to defend; Scenario B' becomes the clearly-audit-defensible path.

IP assignment implication (flag for attorney)

Because Raxx code was written before any entity exists, the intellectual property is currently owned personally by the founder. At entity formation, a written IP assignment agreement from Kris (personally) to the LLC is needed to move the IP into the entity. This is a 1–2 page document an attorney drafts during the formation kit. Without it, the LLC doesn't actually own Raxx — the founder does, personally, and licenses it to the LLC implicitly. This matters for any future investor diligence, for clean trademark assignment of MOOSEQUEST (if moved into the entity), and for clean exit / sale of the business. See questions-for-attorney.md for the formation-day IP-assignment checklist.

Two sub-scenarios for the CPA to choose between

A'. PA LLC only, with CA work affirmatively structured out: → Requires demonstrating that CA stays are recreational: no Raxx commits, no customer emails, no calls, explicit "vacation" auto-responder. Feasible only if the user can and will actually unplug for the CA visits. → ~$7/yr compliance, PA 3.07% only.

B'. PA LLC + CA foreign-qualification from the start: → Accepts that some operational work happens in CA as part of the split-life reality. Files CA foreign-qualification with the PA-formed LLC. → ~$807/yr compliance + PA 3.07% + potential small CA source tax on CA-attributable work. → This is often what CPAs recommend for split-residency founders because it removes the audit risk from an ambiguous nexus question.

Final scenario pair (with PA domicile + <183 CA days + CA-origin work confirmed)

A'. PA LLC only — not recommended given CA-origin work + ongoing CA stays: - Formation: ~$125 one-time in PA - Compliance: ~$7/yr PA annual report - Personal tax: PA 3.07% flat on pass-through - Risk: CA-origin work + quarterly CA stays make "no CA nexus" hard to defend. If FTB audit disagrees, retroactive franchise tax + penalties + interest going back years.

B'. PA LLC + CA foreign-qualification — recommended default given the stated facts: - Formation: ~$125 PA + ~$70 CA foreign-qualification one-time - Compliance: ~$807/yr ($7 PA annual report + $800 CA franchise minimum) - Personal tax: PA 3.07% + small CA source tax on CA-attributable work - Risk: minimal. Audit-defensible. Removes retroactive nexus debate entirely.

Delta = ~$800/yr for audit certainty. Given Raxx was built in CA and the founder continues to work from CA quarterly, B' is the clean path. A' would require affirmatively restructuring future work to keep CA activity purely recreational, and even then the origin-state history leaves a gray area FTB can dispute.

~~Scenario C — De-facto CA tax resident~~ — Ruled out. PA domicile + <183 CA days.

Delaware loses in both active scenarios unless VC is imminent. Wyoming/Nevada buy nothing over PA for this profile.

Questions still needed from the user (remaining blocking)

1. Do you have any connection (physical office, employee, client) in a state other than PA / CA? Drives foreign-qualification analysis beyond the obvious two.
2. Near-term VC-fundraising plan? If yes, Delaware C-Corp becomes the default regardless of residency. (Assumed "no" based on pre-revenue solo-founder context — verify.)
3. Is owner-anonymity a priority? Drives Wyoming / Nevada consideration. (Assumed "no" for standard SaaS brand identity — verify.)

[PA-1]: https://www.pa.gov/agencies/dos/programs/business/types-of-filings-and-registrations/certificates-of-annual-registration — PA annual report ($7/yr, effective 2025) [PA-2]: https://www.pa.gov/agencies/revenue/forms-and-publications/pa-personal-income-tax-guide/pass-through-entities — PA flat 3.07% on pass-through [CA-1]: https://www.ftb.ca.gov/file/business/types/limited-liability-company/index.html — CA $800 minimum + AB 85 expiration 1/1/2024 [CA-2]: https://www.ftb.ca.gov/file/personal/income-types/income.html — CA personal income tax brackets [CA-3]: https://mosey.com/blog/california-economic-nexus-test/ — physical-presence nexus (office/employee/contractor/remote worker) [CA-4]: https://www.ftb.ca.gov/file/personal/residency-status/index.html — CA statutory-resident test (9 months + permanent place of abode) [DE-1]: https://corp.delaware.gov/frtax/ — DE LLC $300/yr annual tax

Questions for your business-formation attorney

1. For a solo SaaS founder living and operating in [home state], is there any scenario where forming in Delaware or Wyoming net-of-foreign-qualification beats forming in [home state]?
2. If I form a holding LLC in Wyoming (for IP) and an operating LLC in [home state] (for revenue and contracts), what's the realistic annual burden? Any benefit at pre-revenue scale?
3. What's the current state of Corporate Transparency Act BOI reporting enforcement? Do I need to budget for it at formation?
4. What does "transacting business" in [home state] specifically trigger, and does a remote-only SaaS operated from my home meet that threshold for a Delaware/Wyoming-formed entity?
5. Can I form the entity mid-year without tax headaches, or is January 1 meaningfully better?

Sources

1. Delaware Division of Corporations — Annual Report and Tax Information. https://corp.delaware.gov/frtax/ (confirmed LLC $300/year, due June 1; corporation franchise tax methods $175/$400 minimums; annual report fees; due dates; penalties). Retrieved via Wayback Machine 2025 snapshot because the live site rejected non-browser requests at research time.
2. Delaware Division of Corporations — fee schedule and forms page. https://corp.delaware.gov/howtoform/ — fee PDFs are published here. Verify at filing time.
3. Wyoming Secretary of State — Business/UCC. https://sos.wyo.gov/business/Business.aspx (direct fee-schedule PDF URL returned 404 at research time; Wyoming SOS fee-schedule figures above are from long-standing published schedules and should be verified at filing time).
4. Nevada Secretary of State — start a business. https://www.nvsos.gov/sos/businesses/start-a-business (dynamic page; specific fee figures should be pulled from the current domestic LLC packet at filing time).
5. IRS — Get an Employer Identification Number (notes FinCEN BOI reporting requirement). https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online

Do not form an entity in any state based on this document alone. Consult a business-formation attorney licensed in both the candidate state of formation and your home state of operation. This document is preparation material only.