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Thanks to lower costs, asset protection, and some other factors, Wyoming is becoming the new destination for business incorporations. Until recently, Delaware was the state of choice for new business filings.
Key Takeaways
- Wyoming had more business incorporations per capita than Delaware for the first time in 2023.
- Some of Wyoming’s fees are lower than Delaware’s.
- Wyoming also offers asset protection.
- Both Wyoming and Delaware require all business entities to have a local registered agent.
A Look at Wyoming’s Business Growth
In the last five years, business incorporations in Wyoming have tripled. It 2023 it grew 42%, reaching 378 new companies per 1,000 adults. Excluding Delaware, the average number of new companies in the rest of the United States was just 36 per 1,000 adults.
According to OpenCorporates, “Wyoming’s growth has come disproportionally from LLCs, and not other entity types.”
Though there might be many reasons that explain why Wyoming has seen an uptick in new LLCs, two stand out: lower costs and asset protection.
1. Lower Costs and Taxes
While filing fees for a limited liability company (LLC) in Wyoming and Delaware are very similar (the articles of incorporation fee is $100 in Wyoming vs. $110 in Delaware), other business costs are lower in Wyoming than in Delaware.
“Delaware now has high franchise fees for issuing shares compared to other states like Wyoming,” says Gary Pryor, senior business consultant with Waters Business Consulting Group in Scottsdale, Arizona. “It is an annual fee that is expensive for small and medium-sized companies. If you are a small business starting or growing, it is better to be in Wyoming because they do not have high franchise fees. Wyoming also does not have a corporate income tax.“
Both Wyoming and Delaware require LLCs to have a local registered agent.
“People are going to put their corporations in the most business-friendly states that have the best tax incentives and the lowest annual fees,” Pryor said. “Wyoming is that state right now.”
2. Asset Protection
The other benefit that Wyoming offers, according to OpenCorporates, is two forms of asset protection rather than one.
The first is called a corporate veil, which makes the business—not the owners—responsible for its liabilities and debts, so an owner’s debts can’t be seized. In Wyoming, unlike some other states, single-member LLCs are also protected by a corporate veil.
The second protects the business from personal creditors (charging order protection).
Per capita is a Latin term (“by heads”) that means “per person.”
Why Per Capita?
With business incorporations, the data usually reports on the number of business filings compared to the number of people in a state (that is, per capita). For instance, in 2023, Wyoming had 378 new companies per 1,000 adults, while Delaware had 268 new companies per 1,000 adults.
OpenCorporates explains its methodology this way: “You would expect a state like California, with vast numbers of people, to have more companies set up each year than a smaller one (population-wise) like Rhode Island. Doing it per capita (or per 1,000 adults) allows us to make useful comparisons between the states.”
According to NAICS, California boasts the most overall business incorporations, at more than 2 million.
The Bottom Line
While Delaware has historically had the most business incorporations because of its favorable business legal protections, Wyoming took the lead in 2023 following a 42% per capita rise in incorporations. Though there may be many reasons for this, Wyoming’s low fees and asset protection probably contributed to the rise.
However, before filing, it’s important to research the full costs and requirements for incorporating a business, no matter the state.
