5-Year LLC True Cost: Home State vs. Delaware, Wyoming, or Any State
Pick your home state, pick any state you're thinking of forming in, and see exactly what you'll spend over 5 years, formation fees, annual reports, registered agent, and foreign qualification costs. Delaware and Wyoming are the usual candidates, but you can compare against all 50. For most small businesses, out-of-state formation costs more, not less.
Pick your home state and any state you would form in, then compare formation fees, annual reports, registered agent, and foreign qualification costs over 5 years. Source: MyStateLLC LLC True Cost Calculator.
See Your 5-Year True LLC Cost
Where you actually operate.
Any state. Delaware and Wyoming are the usual candidates.
5-Year Cheapest PathHome state (Texas)$300 total over 5 years
Form in Texas (home)
Form in Delaware
Home (Texas), 5 years$300One filing, one annual report
Delaware path, 5 years$3,485Plus foreign qualification and a registered agent
DifferenceHome saves $3,185over 5 years
Assumptions
Registered agent (Delaware path)
$125/yr, required since you don't reside there
Foreign qualification (Texas)
$750 one-time, paid in year 1
Annual reports
Owed in both Delaware and Texas on the out-of-state path
Scope
Government fees only, attorney, accountant, and service fees not included
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Why we model 5 years, not 1
Per U.S. Bureau of Labor Statistics Business Employment Dynamics data, 77.9% of new private-sector establishments survive their first year, but only 51.4% are still operating after five years. Annual report fees, registered agent costs, and franchise taxes recur every one of those years, which is why a state that looks cheap at filing time can cost the most by year five.
Yes. The second dropdown accepts any of the 50 states, so you can model forming in Nevada, New Mexico, Florida, or anywhere else against staying home. Delaware and Wyoming are only the defaults because they are the two states people ask about most. The arithmetic is the same whichever you pick: the out-of-state path pays that state's filing fee and annual charges, a registered agent there, a one-time foreign qualification fee in your home state, and your home state's annual report on top. That is why the home state wins for all 2,450 state pairs in our data, not just against Delaware and Wyoming.
Delaware's Court of Chancery is a dedicated business court with centuries of corporate case law, a meaningful advantage for complex business arrangements, venture capital deals, and public companies. For the typical small business LLC, those advantages are irrelevant. The Court of Chancery handles disputes between equity holders, not the everyday business liability protection an LLC provides. Meanwhile, Delaware's $400/yr LLC tax (Delaware LLCs file no report) and the cost of foreign qualifying in your home state add up fast.
If you form an LLC in State A but operate in State B, most states require you to register your LLC there as a 'foreign LLC'. Paying a one-time registration fee and annual report fees as if you had formed there. This is why out-of-state formation rarely saves money: you end up paying fees in two states instead of one. The foreign qualification fee in this tool reflects the one-time registration cost for your home state.
Yes, significantly. A national registered agent service typically runs $50 to $300/year. The $125/year figure used here is a conservative middle-ground estimate. If you use a premium service or an attorney as your registered agent, costs can exceed $300/year. If you use a budget provider, you may pay as little as $50. Regardless, the cost applies to Delaware and Wyoming paths but not your home state path, where you can often serve as your own registered agent.
Wyoming is generally cheaper than Delaware for small businesses, lower formation fee ($100 vs $110), much lower annual fee ($60 vs $400), and similar privacy protections. Wyoming also has strong charging order protections that rival Delaware's. However, the same fundamental issue applies: if you operate in your home state, you'll owe foreign qualification fees and annual reports there too, erasing most of the savings. For most small businesses, forming in your home state is simpler and cheaper than either.
California requires all LLCs, domestic and foreign, to pay an $800/year minimum franchise tax to the Franchise Tax Board, on top of the Secretary of State's annual report fee. This makes California one of the most expensive states to operate an LLC. Importantly, this $800 tax applies regardless of whether you form in California, Delaware, or Wyoming: if you operate in California, you owe it. The Delaware or Wyoming paths do not escape the CA franchise tax. They add their own fees on top of it.
