Arizona vs Delaware: Where Should You Form Your US Company?
Arizona's low-maintenance LLC vs Delaware's investor-friendly corporation. A practical comparison of costs, annual obligations, taxes, investor appeal and privacy for non-resident founders.
Arizona and Delaware sit at opposite ends of the spectrum. Arizona minimises cost and paperwork: a $50 LLC with nothing to file at the state each year. Delaware maximises legal recognition: the corporate home of venture-backed startups, with a price to match. Which is right depends almost entirely on whether you plan to raise investment.
Comparison
| Arizona | Delaware | |
|---|---|---|
| LLC formation fee | About $50 | About $110 |
| UCB LLC + EIN, all-in | $199 | $259 |
| LLC annual state cost | $0 (no annual report) | $300 annual tax, due June 1 |
| Corporation formation | About $60 | About $109 |
| Corporation annual | Annual report + 4.9% tax on Arizona income | Franchise tax ($175–$400 minimum for most startups) + $50 report |
| State income tax on out-of-state business | Generally none | None |
| Publication | Only outside Maricopa/Pima counties | None |
| Privacy | Members or managers listed | Owners not listed in formation filing |
| Investor appeal | Moderate | Very high |
| Courts and corporate law | Standard | Most developed in the USA |
| Best for | Bootstrapped online businesses, Arizona operations | Venture-backed startups |
Our rule of thumb
- Bootstrapping, or running a service, content or e-commerce business from abroad: an Arizona LLC (or Wyoming or New Mexico). You save around $300 a year compared with a Delaware LLC, with no practical downside.
- Raising venture capital, joining a US accelerator, or issuing stock options: a Delaware C-Corporation. Investors expect it, and standard documents assume it. See why startups choose Delaware.
- Operating physically in Arizona: an Arizona entity avoids registering an out-of-state company there.
Why a Delaware LLC rarely makes sense for small businesses
Delaware's advantages, its corporate law, courts and investor familiarity, matter most for corporations with investors. A small LLC run from abroad gets little extra from Delaware while paying $300 every year, even with no income, until it is dissolved. See Delaware LLC vs Wyoming LLC and Delaware franchise tax.
Five-year state cost for an LLC
| Arizona | Delaware | |
|---|---|---|
| Formation | $50 | $110 |
| Years 2–5 | $0 | $1,200 |
| Total | $50 | $1,310 |
Federal tax is the same
Your state choice doesn't change federal obligations. A foreign-owned single-member LLC files Form 5472 every year in either state; a corporation pays 21% federal tax on profits in either. See Form 5472 explained.
Can I switch later?
Yes. Many founders start with a low-cost LLC and convert to a Delaware C-Corp when investors appear. See converting an LLC to a C-Corp.
Other comparisons
How UCB helps
We form companies in both states and will recommend the one that fits your plans. See the Arizona and Delaware pages for every package price.
Arizona or Delaware? WhatsApp us at +91 8105 199 399 or email info@ucbsolutions.com with your plans and we will recommend one.
Let our experts handle it for you
Every business is different. Message us with your country, business type and goals, and we will recommend the right structure, state and package. We do the work; you focus on your business.
This article is general information for non-resident business owners and is not legal or tax advice. Rules and fees change; contact us to confirm what applies to your situation.
