Where not to incorporate.

Reviewed by Elizabeth A. Tresp, JD, LL.M., trust & probate litigator · Updated July 2026

Delaware: built for someone else’s company

Delaware earned its reputation honestly, for large companies. Roughly two-thirds of U.S. public companies and the overwhelming majority of venture-backed startups incorporate there, because sophisticated investors and the Court of Chancery expect it. If you are raising institutional venture capital or heading for an IPO, Delaware may genuinely be right.

Most of our clients are not doing either. For a small-business owner, a real estate investor, or a family building an asset-protection structure, there are three primary reasons Delaware is the wrong home, and, notably, none of them is protection:

• Doubled administrative costs. If you form in Delaware but live and operate elsewhere, you must also register that entity as a “foreign” entity in your home state, two registered agents, two sets of annual filings, two annual fees, for one business. You pay Delaware for the privilege and your home state anyway.
• Unnecessarily complex compliance. Delaware’s framework is tuned for companies with boards, multiple share classes, and outside investors. For an ordinary LLC or a family holding structure, that machinery adds paperwork and moving parts you simply do not need, and a Delaware corporation’s franchise tax scales with authorized shares and can climb into the thousands, a bill many small incorporators never see coming.
• Shifts in judicial predictability. Delaware’s great historical selling point was a stable, predictable body of business-court law. After high-profile Court of Chancery rulings, 2025 brought a wave of companies reincorporating out (“DExit”) and legislative changes to governance law (SB 21). For anyone who chose Delaware precisely for certainty, that certainty is no longer a given.

To be clear, none of this is about weaker protection. Delaware’s LLC charging-order protection is genuinely strong, the charging order is the exclusive creditor remedy, even for single-member LLCs. It is simply the same core protection Wyoming and Nevada offer, without Delaware’s overhead. Delaware is not a bad state; it is optimized for a company that is not yours.

California: the most expensive door to walk through

California is a wonderful place to live and do business. It is an expensive place to base an entity. Every LLC or corporation subject to California owes an $800 minimum franchise tax every year, and the first-year waiver that used to soften that has expired, so an entity formed today owes the $800 in year one. LLCs with meaningful California income owe an additional gross-receipts fee on top. California also puts an entity’s managers on the public record through its Statement of Information, so you trade away privacy as well.

So what is the honest play for a Californian? California registration is only necessary for the limited activity that actually takes place in California, and that narrow footprint pairs well with a Wyoming or Nevada structure that does the heavy lifting. A common, legitimate design: a Wyoming or Nevada holding company owns your assets and business interests in a protective, private, low-cost jurisdiction, while a right-sized California entity handles only the business you genuinely conduct in California and pays California tax on exactly that. You keep protection, privacy, and long-term planning where they belong, and you meet California’s requirements for the California-facing slice, without pretending the in-state activity isn’t there. That is real structuring. “A Wyoming LLC makes my California taxes disappear” is not.

General comparison for illustration; tax and statutory details change and depend on your facts. We confirm the current rules for your situation.

Where to look instead, and who does what

For most owners and families, the right home for a holding company or asset-protection structure is a jurisdiction like Wyoming or Nevada, strong charging-order protection, real privacy, no state income tax, and low cost. The right answer still depends on where you live, where you operate, what you own, and what you are protecting against. That is a legal question, and we answer it as attorneys.

When it comes time to actually form and maintain the entity, our affiliated Tresp Corporate Services handles the mechanics, formation and registered-agent service in all 50 states and ongoing corporate compliance, as corporate paper and compliance only, never legal advice. We explain the why; they execute the how. You get strategy and administration from the right hands, without paying twice for the wrong state.

Whether Wyoming is the right home for your structure, or whether Nevada, South Dakota, an offshore jurisdiction, or a layered plan serves you better, depends on your assets, exposure, and goals. We have structured domestic and offshore protection since 1992, and we keep an office in Kemmerer, Wyoming. To talk it through, call (858) 755-6672.