Comparing Nevada and Delaware LLC: Which State is Right for You?

Location is one of the most vital factors you must consider when incorporating a business. Your primary location determines how high your company's chances of surviving are. It also affects how much it would cost you to run your startup.

Each state has its regulation for taxing and registering businesses. The more benefits you have, the more resources you can put into expanding your startup. If you want your company to flourish, you need to find an environment that could help you do that.

With so much to keep in mind, it can be challenging to determine which state is the best for your startup. So, to help you out, we've compared the benefits of incorporating a business in Nevada and Delaware.

Learn what makes the Silver state the most pro-business location in the country through this guide.

If you're choosing between incorporating an LLC in Delaware or Nevada, here are some of the major differences you need to keep in mind.

High Filing Costs

Delaware's initial filing cost ranges between $89 to $235 for domestic and foreign businesses. Additionally, the state requires applicants to file annual reports and pay annual fees to operate. These fees pile up, resulting in higher filing costs than if you set up in Nevada.

Delaware also asks you to pay filing fees for other business formation documents like Name Reservation and Registered Agent Designation, making the process much more tedious.

Extra Foreign Qualification Costs

Foreign LLC formation is more expensive in Delaware than in Nevada. Unlike Nevada, Delaware is not as welcoming to foreign businesses and entrepreneurs.

Suppose you're a foreign business owner planning to incorporate in Delaware but have operations outside the state. In that case, you're qualified for their Foreign Qualification Laws.

Delaware requires foreign business owners to pay a $245 fee for a Qualification Certificate and another $125 for their annual fee. If you want to keep your business expenses minimum, consider forming an LLC in Nevada.

Franchise Taxes

As mentioned earlier, Delaware-incorporated businesses must pay franchise taxes by March 1st of each year. This rule applies to both domestic and foreign businesses.

Delaware franchise taxes start at a minimum of $175 and could reach a maximum of $200,000.

Complicated Requirements

Suppose you're a non-resident registering an LLC in Delaware. In that case, you still need to follow your local state's filing and licensing requirements to operate in Delaware. You must also file annual reports in each location to stay compliant, which means paying double the annual fee.

Legal Disputes

If your LLC in Delaware is involved in a civil case, you'll have to travel to Delaware to handle it.

Cases that involve your business in Delaware will be heard in the state's court. This regulation means you need to get to Delaware to attend hearings and hire a Delaware attorney to manage your case. Lastly, having a Delaware attorney means paying annual charges ranging from $129 per year.

Ultimately, operating an LLC in Delaware would be costlier compared to being set in Nevada.