Delaware vs Florida LLC for Non-Residents

Delaware gets most of the attention, but Florida is a legitimate option for certain non-resident founders. Here is how the two actually compare once you look past the hype.

The quick answer

If you plan to raise venture capital, want maximum credibility with US investors, or expect to bring on co-founders and issue different classes of shares later, Delaware is still the safer default. If you are running a straightforward service business, an ecommerce store, or a consultancy and you have no plans to raise institutional funding, Florida can work just as well and sometimes with a simpler day-to-day compliance picture.

Neither state changes your federal obligations. A foreign-owned single-member LLC has to file Form 5472 alongside a pro-forma Form 1120 every year, even with zero revenue, regardless of whether the LLC is formed in Delaware, Florida, or anywhere else. Skipping this filing carries a penalty of 25,000 dollars per missed form, so this is not optional paperwork.

Why Delaware is the default for many founders

Delaware built its reputation on the Court of Chancery, a specialized court that only hears business disputes and has decades of case law that investors and lawyers already understand. If you think you will raise money from US angels or VCs, or you want a cap table that looks familiar to them, Delaware removes friction. Delaware also lets LLCs keep member names off the public formation record, which some founders value for privacy.

The tradeoff is that Delaware charges an annual flat tax on LLCs that has nothing to do with your income, plus a registered agent fee. It is not expensive in absolute terms, but it is a fixed cost you pay whether your business made money or not, and it is due every year without fail.

Where Florida makes more sense

Florida has no state personal income tax and, for a foreign-owned single-member LLC taxed as a disregarded entity, generally no state-level corporate income tax either, since there is no separate entity-level tax event to trigger it. You still owe federal obligations exactly as you would in Delaware. The Florida Division of Corporations also runs a straightforward online system for formation and annual reports, and registered agent costs tend to run similarly to Delaware.

Florida is worth a closer look if:

• You are selling physical products or digital services to US customers and want a state with a broad economic presence and no personal income tax layer to think about later if you ever relocate.
• You do not need Delaware's specific legal reputation because you are not planning to raise from institutional investors in the near term.
• You want a state where forming and maintaining the LLC feels operationally simple, without the Delaware-specific franchise tax rules that occasionally trip up first-time founders.

Cost and compliance side by side

Government fees change from year to year in both states, so always check the current numbers on the Secretary of State or Division of Corporations website before you file. What tends to stay consistent is the shape of the obligations.

What does not change no matter which state you pick

Your federal tax and banking path is identical either way. You will still need an EIN from the IRS, applied for via Form SS-4 (non-residents without an SSN typically fax or mail this rather than apply online). You will still likely want an ITIN if you plan to file personal tax returns tied to the LLC, or if a bank or platform specifically requires one, since an ITIN does not require a US visa and exists specifically for people who are not eligible for a Social Security Number. And you will still need to open a US business bank account, which providers like Mercury, Wise, or Relay can generally do remotely for a properly formed LLC with an EIN in hand.

This is the part of the process that trips up most non-resident founders, not the choice of state. Founders Credit handles the full sequence end to end, LLC formation, EIN, ITIN where needed, and the US business bank account and card setup, so you are not stitching together five different services and guessing at the order.

A simple way to decide

Ask yourself one question: will you likely raise money from US investors in the next two to three years? If yes, lean Delaware. If no, and you just want a clean US entity to invoice through, hold a Stripe or Mercury account, and build credit history for your business, Florida is a perfectly reasonable choice and may involve less annual friction. Wyoming remains worth a look too if minimizing ongoing state fees is your only priority and you have no state-specific reason to be in Delaware or Florida.

Glossary

Registered agent: a person or company with a physical address in your formation state who receives legal and state mail on your LLC's behalf. Required in every state. Franchise tax or annual LLC tax: a flat fee some states charge LLCs each year just for existing, unrelated to profit. EIN: Employer Identification Number, issued by the IRS, needed to open a US bank account and file taxes. ITIN: Individual Taxpayer Identification Number, for people who need a US tax ID but are not eligible for a Social Security Number. Form 5472: an information return that foreign-owned single-member LLCs must file with a pro-forma Form 1120 every year, disclosing transactions between the LLC and its foreign owner, even with no income. Disregarded entity: the default IRS tax treatment for a single-member LLC, meaning the LLC itself does not file a separate income tax return, though 5472 reporting still applies when foreign owned.

Frequently asked questions