Delaware LLC
A Delaware LLC is a limited liability company registered in Delaware, a US state known for business-friendly laws and privacy. For European founders building US operations, it's one option, though not always the default.
What is a Delaware LLC?
A Delaware LLC is a business entity registered in the state of Delaware. It gives you a legal structure in the US, separates your personal assets from business liability, and exists independently of where you physically live. You can run a Delaware LLC entirely from Europe.
Unlike a sole proprietorship, an LLC protects your personal assets if someone sues the business. If your LLC owes money or faces a claim, creditors generally cannot touch your home or savings.
Delaware vs. Wyoming: What's the real difference?
Both Delaware and Wyoming are popular choices for non-US founders. The practical differences are small:
- Delaware: Longer history, more established case law, slightly more prestige. Costs around $100-$200 to form, plus annual franchise tax (around $75-$300 depending on structure).
- Wyoming: Fewer reporting requirements, no state income tax, lower annual fees (around $50). Often the default for bootstrapped founders.
For most European founders starting out, Wyoming and Delaware are functionally equivalent. Delaware's reputation matters mainly if you're planning a future funding round or acquisition.
When would a non-US founder choose Delaware?
Example: You are a German SaaS founder planning to raise venture capital in 2-3 years. Investors expect a Delaware entity. You file your Delaware LLC formation now, open a US bank account tied to it, and get an EIN for US tax purposes. Your US business is real, separate from your personal finances, and familiar to future investors.
If you have no investor plans and want the cheapest path to a US presence, Wyoming is simpler.
How does a Delaware LLC fit the US business setup?
A Delaware LLC is the legal container. But to operate fully, you also need:
- ITIN or EIN: Federal tax identification. Non-residents can get an ITIN (no visa needed) or file an SS-4 for an EIN without visiting the US.
- US business bank account: Tied to your EIN and LLC. Services like Mercury, Wise, and Relay open these remotely.
- US business credit cards: Available once you have an EIN and bank account.
- Annual compliance: File Form 5472 (information return) with your US tax return even if you have zero income. Failure to file carries a $25,000 penalty.
Founders Credit handles the entire journey: Delaware LLC formation, ITIN/EIN, bank account setup, and business credit card applications. You sign documents remotely, and your US business is live within weeks.
Key takeaway
A Delaware LLC is a straightforward way for European founders to own a real US business entity, protect personal assets, and build US tax and financial identity. It's not a tax loophole or a magic structure, just a legal container that makes sense if you're serious about US operations or future investor conversations. For most, Wyoming is equally practical and cheaper. The choice depends on your timeline and growth plans.
Frequently asked questions
Do I need a US visa or residency to own a Delaware LLC?
No. You can own and operate a Delaware LLC from anywhere, including Europe, without a visa. The entity is registered in Delaware, not tied to your location.
What taxes do I owe with a Delaware LLC?
As a non-resident, you file Form 5472 with your US tax return (even with zero income) and may owe US tax on income sourced in the US. Owners pay personal income tax on distributions. State franchise tax is separate (around $75-$300/year). Consult a US tax advisor for your specific situation.
Is a Delaware LLC better than a Wyoming LLC for early-stage founders?
Functionally, no, both protect assets and work with US banks. Delaware has more investor familiarity and established case law; Wyoming is cheaper and simpler. Choose Delaware if you plan venture funding. Wyoming is the default for bootstrapped, cost-conscious founders.
Can I open a US bank account with just a Delaware LLC, or do I need an EIN?
You need an EIN (employer identification number). Most US banks won't open a business account without one. You get an EIN by filing Form SS-4 by fax or mail; non-residents do not need to visit the US.
What happens if I don't file Form 5472?
The IRS imposes a $25,000 penalty per year of non-filing. Form 5472 is an information return required every year, regardless of whether your LLC makes or loses money. It's a compliance must-do.
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