Delaware vs New York: Side-by-Side Comparison
Here's a comprehensive comparison of the two states across all key factors for non-resident LLC formation:
| Feature | Delaware | New York |
|---|---|---|
| Income Tax | 2.2%–6.6% | 4%–10.9% |
| Corporate Tax | 8.7% | 6.5%–7.25% |
| Sales Tax | 0% | 4% (+ local, NYC ~8.875%) |
| Annual Fee | $300 | $9 biennial |
| Formation Fee | $90 | $200 + $1K–2K publication |
| Privacy | No member/manager disclosure | Publication requirement reveals entity |
| Court System | Court of Chancery (specialized) | Strong commercial courts |
| Asset Protection | Moderate | Moderate |
| Best For | Corporations, holding companies | Businesses operating in NYC, finance and media companies |
Tax Comparison
Delaware Taxes
- Personal Income Tax: 2.2%–6.6%
- Corporate Tax: 8.7%
- Sales Tax: 0%
New York Taxes
- Personal Income Tax: 4%–10.9%
- Corporate Tax: 6.5%–7.25%
- Sales Tax: 4% (+ local, NYC ~8.875%)
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
| Cost | Delaware | New York |
|---|---|---|
| Formation Fee | $90 | $200 + $1K–2K publication |
| Annual Fee | $300 | $9 biennial |
| Registered Agent (est.) | $100–$300/year | $100–$300/year |
| Estimated Year 1 Total | $540 (with RA) | $20171 (with RA) |
Privacy & Asset Protection
Delaware
- Privacy: No member/manager disclosure
- Asset Protection: Moderate
- Court System: Court of Chancery (specialized)
New York
- Privacy: Publication requirement reveals entity
- Asset Protection: Moderate
- Court System: Strong commercial courts
The Verdict: Delaware or New York?
New York has a unique publication requirement that adds $1,000–$2,000 to formation costs. Delaware is much cheaper to form and maintain. However, New York has surprisingly low ongoing costs ($9 biennial statement). If you operate in NYC, you'll need to register as a foreign LLC in NY anyway. For non-resident entrepreneurs with no NY operations, Delaware is clearly better.
Our Recommendation
Delaware for non-residents; New York only if you operate there
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.
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