# Where to incorporate

> Formation state versus where you operate: Delaware, Wyoming, Nevada and the home state compared, from the state guides.

Source: https://lopifi.com/learn/where-to-incorporate
Part of: Lopifi — US GAAP books on autopilot, checked by a CPA (https://lopifi.com)

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**Where should I incorporate my startup — Delaware, Wyoming, Nevada or my home state?** Formation state versus where you operate: Delaware, Wyoming, Nevada and the home state compared, from the state guides.

Where you **form** the company and where it **operates** are separate questions. The state of formation supplies the corporate law, the court and an annual bill. Every state where the company has staff, an office or enough activity wants it registered there too — [foreign qualification](https://lopifi.com/md/glossary/foreign-qualification) — and taxes the income it apportions there. Forming in a no-tax state does not take the company out of its home state's taxes.

Northwind is formed in Delaware and operates in its home state, so it does both: Delaware's annual report and franchise tax, and its home state's registration and taxes. How that works is the compliance track's [good standing lesson](https://lopifi.com/md/learn/keeping-a-delaware-corporation-in-good-standing) and the guide to [registering in a new state](https://lopifi.com/md/startups/registering-in-a-new-state).

| State | Corporate tax | Annual report |
| --- | --- | --- |
| [Delaware](https://lopifi.com/md/states/delaware) | 8.7% flat | Mar 1 — $50 fee + franchise tax ($175 min) |
| [Wyoming](https://lopifi.com/md/states/wyoming) | None | Anniversary month; license tax from $60 |
| [Nevada](https://lopifi.com/md/states/nevada) | None (Commerce Tax over $4M revenue) | Annual list + business license, anniversary month |
| [California](https://lopifi.com/md/states/california) | 8.84%, $800 minimum | Statement of Information, yearly, $25 |

Four common choices, from the state guides.

*[Figure: us states map]*

Which states tax corporate income (1) and which tax gross receipts or nothing (0). From the state guides, 2026.

**Delaware**
- Pro: The corporate law and court investors expect.
- Pro: No Delaware income tax if all it has there is its registered office.
- Con: Franchise tax and annual report every March 1.
- Con: A second state's filings, since it operates elsewhere.
- Best for: Any company that will raise venture capital.

**Wyoming or Nevada**
- Pro: No corporate income tax in the state itself.
- Pro: Wyoming annual report: Anniversary month; license tax from $60.
- Con: Still qualifies and pays tax where it operates.
- Con: Investor documents are rarely written for it.
- Best for: A small LLC or holding company with no outside investors.

**Your home state**
- Pro: One state's filings, not two.
- Pro: No registered-agent fee in a second state.
- Con: A move to Delaware later, if it raises money.
- Best for: A local business that will only ever operate in one state.

Where to form.

Whichever state you form in, the company needs a [registered agent](https://lopifi.com/md/glossary/registered-agent) there — someone with an address in the state to receive legal papers and the state's notices — and has to stay in [good standing](https://lopifi.com/md/glossary/good-standing) by filing its [annual reports](https://lopifi.com/md/glossary/state-annual-report) and paying what it owes.

> **Form where the law suits the company's future; you will register and pay tax where it actually works regardless.**

## Where this lesson's rules come from

- [Delaware Division of Corporations, About the Division](https://corp.delaware.gov/aboutagency/) — Why businesses choose Delaware — in Delaware's own words (state)
- [8 Del. C. §132(a)](https://delcode.delaware.gov/title8/c001/sc03/index.html) — Delaware General Corporation Law — registered office and registered agent (§§131–132) (state)
- [FTB Pub. 3556 LLC MEO (Rev. 09/2021), Annual Tax and LLC Fee](https://www.ftb.ca.gov/forms/misc/3556.html) — California's $800 LLC annual tax, and the LLC fee on total income of $250,000 or more (state)

## Read further

- https://lopifi.com/md/startups/registering-in-a-new-state
- https://lopifi.com/md/startups/startup-compliance-calendar
- https://lopifi.com/md/accounting/delaware-franchise-tax

- **Track:** [Entity types](https://lopifi.com/md/learn/entities)
- **Lesson:** Lesson 6 of 9 — 7 min
- **Terms taught:** [Foreign qualification](https://lopifi.com/md/glossary/foreign-qualification), [Registered agent](https://lopifi.com/md/glossary/registered-agent), [Good standing](https://lopifi.com/md/glossary/good-standing), [State annual report](https://lopifi.com/md/glossary/state-annual-report), [Delaware franchise tax](https://lopifi.com/md/glossary/delaware-franchise-tax)
- **Previous:** [Check-the-box election, Entities · Lesson 5](https://lopifi.com/md/learn/convert-llc-to-c-corp/check-the-box-conversion)
- **Next:** [US companies for founders abroad, Entities · Lesson 7](https://lopifi.com/md/learn/us-company-for-foreign-founders)
- **The course:** https://lopifi.com/md/learn