Which US State Should You Choose for Company Registration?

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Following up on the previous article, many people's first reaction after deciding to register a US company is: which state should I incorporate in?

Different states have different rules, fees, and privacy protections. If you choose randomly, you might encounter various problems later: either annual fees are too high, tax burden is too heavy, or registration information transparency is too high, making it unsuitable for cross-border business.

This article will quickly walk you through the most common registration states to help you make a rational choice.

Why Does State Selection Matter?

The United States is a federal country, and company registration is a state-level matter.

• Different states have different annual fees and tax filing requirements
• Some states have loose privacy protection, while others require disclosure of shareholder information
• Some states are better suited for large fundraising companies, while others are better for small entrepreneurs

Therefore, choosing the right state can help you save money, save hassle, and reduce compliance risks.

Common Registration State Comparison

1. Delaware

Pros:

• World-renowned company registration location, especially favored by large enterprises and VCs
• Complete corporate law with investor-friendly legal environment
• Specialized Court of Chancery for business disputes

Cons:

• High annual franchise tax, minimum $300
• Advantages don't materialize for ordinary small cross-border entrepreneurs
• Relatively high registration and maintenance costs

Suitable for: Startups preparing for fundraising and VC engagement

2. Wyoming

Pros:

• Low annual fees (Annual Report only costs around $60)
• Excellent privacy protection - no mandatory disclosure of shareholder and director information
• Fast registration process with high cost-effectiveness
• No state income tax

Cons:

• Less well-known than Delaware
• Relatively newer business environment

Suitable for: Cross-border e-commerce, SaaS, small overseas expansion teams

3. Colorado

Pros:

• Cheap formation costs (LLC registration fee around $50)
• Simple reporting requirements - annual reports only need online submission with low cost
• Startup-friendly

Cons:

• Privacy protection not as good as Wyoming, requires disclosure of some member information
• Less reputation and legal environment compared to Delaware

Suitable for: Budget-limited small entrepreneurs or individuals seeking low-barrier entry

4. Other States (like California, Texas)

Characteristics:

• Usually chosen only by locally operating businesses
• Complex tax and compliance requirements, not suitable for non-US residents
• Usually higher annual fees and maintenance costs

Why not recommended: Too complex and costly for cross-border businesses

Which State Do I Recommend?

Considering cost, privacy, taxation, and operational convenience:

• Individual entrepreneurs/small teams going overseas → Recommend Wyoming
• Preparing for fundraising/VC engagement → Recommend Delaware
• Limited budget, seeking minimalist registration → Consider Colorado

For most cross-border businesses (especially those needing Stripe payments), Wyoming is the most cost-effective choice.

My Choice

I ultimately chose Wyoming LLC:

1. Low cost - no significant annual maintenance pressure
2. Suitable for individual cross-border projects
3. Mature registered agent services - unlikely to encounter pitfalls
4. Adequate privacy protection - information won't be disclosed randomly

If you're like me - an individual developer/small team not planning immediate fundraising - Wyoming is basically the best answer.

Decision Framework

Here's a simple decision framework:

Ask yourself three questions:

1. What's your budget?

   • Tight → Colorado
   • Average → Wyoming
   • Ample → Delaware

2. Do you plan to raise funds?

   • No fundraising → Wyoming
   • Planning fundraising → Delaware

3. Is privacy important?

   • Very important → Wyoming
   • Not important → Colorado/Delaware

Following this framework, 90% of cross-border entrepreneurs will point to Wyoming.

Summary

There's no standard answer for choosing a registration state, but there are basic principles:

• Cost-sensitive → Wyoming
• Fundraising-oriented → Delaware
• Minimalist testing → Colorado

Remember, starting is more important than perfection. Choose a suitable state and get registered first. When your business develops to a certain stage, you can migrate if necessary.

In the next article, we'll discuss the specific registration process and materials you need to prepare.