Getting ready to incorporate my B2B SaaS. I'm based in Colorado, no plans to raise VC (bootstrapping), probably 1-3 employees eventually.
Everyone says "just do Delaware" but I keep seeing Wyoming mentioned. Lower fees, more privacy, no franchise tax. Is Wyoming actually viable in 2024 or is Delaware still the default?
I made the mistake of incorporating in Delaware "just in case I raise money later." Four years in, still bootstrapped, and I've paid like $3,000 in franchise taxes for nothing.
Honest answer for your situation (B2B SaaS, bootstrapped, small team): just form an LLC in Colorado.
You're already there. If you form in Delaware or Wyoming you'll still have to register as a foreign entity in Colorado. That means paying fees in TWO states instead of one.
Quick breakdown on when each makes sense:
Delaware: Court of Chancery (specialized business court), 100+ years of case law, VCs require it. But franchise tax can be $200-200K+ and you pay it even if you're not profitable.
Wyoming: $50/year flat fee, no state income tax, best privacy. But no specialized court system and investors will make you convert anyway.
Home state: No foreign registration needed, simplest setup, convert later if you raise.
Counterpoint: I'm an angel investor and I've passed on deals because they were Wyoming LLCs and the founder didn't want to convert. It creates friction. Every term sheet assumes Delaware C-corp.
If there's even 20% chance you might raise, just start with Delaware. The franchise tax minimum is like $175/year for small companies.
@KimM_Counsel if I do Colorado LLC now, how hard is it to convert to Delaware C-corp later?
$2-5K in legal fees, couple weeks. Form new DE corp, exchange LLC membership interests for stock, transfer assets, dissolve LLC. There can be tax implications so you'd want a CPA involved.
But here's the thing - if you're raising a proper seed round, investors often pay for or reimburse this legal work anyway. It's standard.
Quick note on Wyoming privacy: it's not as meaningful as people think. If you have any California nexus (employees, customers, whatever), CA will still require you to register and disclose there. The privacy only helps if you're truly isolated in Wyoming which... you probably aren't.
tl;dr:
oh also fun fact - Delaware's franchise tax calculator is confusing as hell. First year I got hit with a $7K bill because I calculated it wrong. There are two methods and you need to use whichever is lower. Almost had a heart attack before I figured it out.
Decision made: Colorado LLC. Keeps things simple, can always convert later. Thanks everyone - way more helpful than the generic "just use Delaware" advice I was getting elsewhere.
Quick update for anyone who finds this thread later: Been running as a Colorado LLC for over a year now and it was 100% the right call. Total annual cost is under $50 for the periodic report. Zero regrets.
Revenue is growing nicely and I'm still bootstrapped. If I ever do raise, I'll deal with the conversion then. But for now this has saved me probably $2K+ in Delaware franchise taxes alone.
Bumping this thread because I just went through the Delaware-to-Wyoming conversion process and wanted to share. My situation: 7-year-old Delaware C-corp, always bootstrapped, never raised, and I finally got fed up with the franchise tax.
Conversion cost me about $1,800 in legal fees plus filing costs. Took about 3 weeks. Now my annual cost is $62 in Wyoming vs ~$450/year I was paying Delaware. Should pay for itself in under 5 years.
The process was pretty smooth - domestication filing, new bylaws, update your registered agent, notify your bank. If you're profitable and 100% sure you won't raise, Wyoming is genuinely better.
@MikeP_SaaS Good data point. One thing worth mentioning for others considering this: make sure you check if you have any contracts with "change of domicile" notice requirements or consent provisions. Some enterprise contracts and loan agreements require notification or even approval before you redomicile.
Also, 2025 note: Delaware did bump the minimum franchise tax to $225 this year. Small increase but it adds up over time for bootstrapped companies.
Found this thread while researching for my own startup. Really appreciate the real-world follow-ups over a year later - so much better than the generic blog posts out there.
Question for the group: does the calculus change at all if you're planning to apply to accelerators like YC or Techstars? I know they push Delaware hard but wondering if they'd accept a Wyoming entity that converts during the program.
@JenDevOps - for accelerators specifically, YC and Techstars both require Delaware C-corps. They won't accept Wyoming entities or LLCs. The conversion happens during the program and is baked into their standard legal package.
If you're seriously considering applying to top-tier accelerators, just start with Delaware. The franchise tax for an early-stage company is minimal (like $225/year) and you avoid the hassle of converting during an already intense program.
Another update from me - still happily running as a Colorado LLC. Actually just crossed $200K ARR last month! No investors, no Delaware, no regrets.
The thread keeps getting bumped so figured I'd share. For anyone debating this in 2025: if you're genuinely bootstrapping, don't overcomplicate it. Form in your home state, focus on building the business, and deal with incorporation stuff later if/when it actually matters.
Appreciate this thread so much. Saved me from making the "default Delaware" mistake. Just filed my Texas LLC last week - took 20 minutes online and cost $300 total.
One thing I learned: Texas has no state income tax AND no franchise tax for businesses under $2.47M in revenue. So for early stage bootstrappers its basically free to operate here. Something to consider for anyone not tied to a particular state.
Having formed entities in both states for clients, here's my honest comparison for 2026:
Delaware wins for: Venture-backed startups (VCs expect it), companies planning IPO, complex corporate governance, well-developed case law (Court of Chancery). Annual cost: ~$400-$600 (franchise tax + registered agent).
Wyoming wins for: Small businesses, real estate holding LLCs, privacy-focused owners, low-cost maintenance. Annual cost: ~$52 (annual report) + registered agent if needed. No state income tax, no franchise tax.
The biggest misconception: forming in Delaware doesn't save you from your home state's taxes or registration requirements. If you live in California and form a Delaware LLC, you STILL owe California's $800 franchise tax AND must register as a foreign LLC in CA. So you're paying double.
This is exactly right. The #1 mistake I see: solo consultants in California forming Delaware LLCs because a YouTube video told them to. They end up paying Delaware fees + California foreign LLC fees + California franchise tax — more expensive than just forming in California.
Simple rule: form in Delaware if you're raising institutional capital. Form in your home state for everything else. Wyoming is a good choice only if you actually operate there or need the specific privacy/asset protection features and don't have a home-state nexus.