Delaware vs Nevada LLC: Which Is Better for Non-Residents?

Delaware vs Nevada: Side-by-Side Comparison

Here's a comprehensive comparison of the two states across all key factors for non-resident LLC formation:

Tax Comparison

Delaware Taxes

• Personal Income Tax: 2.2%–6.6%
• Corporate Tax: 8.7%
• Sales Tax: 0%

Nevada Taxes

• Personal Income Tax: None
• Corporate Tax: None
• Sales Tax: 6.85%

For non-resident entrepreneurs with single-member LLCs treated as disregarded entities, state income tax typically only applies if you have income sourced within that state. If you have no in-state operations, employees, or customers, state income tax may not apply regardless of which state you form in.

Formation & Annual Costs

Privacy & Asset Protection

Delaware

• Privacy: No member/manager disclosure
• Asset Protection: Moderate
• Court System: Court of Chancery (specialized)

Nevada

• Privacy: No member/manager disclosure, no IRS info sharing
• Asset Protection: Strong
• Court System: Standard state courts

The Verdict: Delaware or Nevada?

Both states offer strong privacy and no corporate income tax (Delaware doesn't tax out-of-state income). Nevada adds extra privacy with no IRS information sharing agreement but has higher annual costs ($350 vs $300). Delaware's Court of Chancery gives it an edge for complex business disputes. Nevada is slightly cheaper to form but more expensive annually. For most non-resident entrepreneurs, Wyoming (not listed here) may actually be the better choice than either.

Remember that regardless of which state you form your LLC in, your federal tax obligations remain the same. All foreign-owned single-member LLCs must file Form 5472 and a pro forma Form 1120 annually, with a $25,000 penalty for non-compliance.