Side-by-side comparison for Michigan owners considering Delaware.
Cost comparison
Delaware: $110 state filing + $300/yr franchise tax = $410 year-one, $300/yr after. Michigan: $50 state filing + $25/yr annual report = $75 year-one, $25/yr after. If you form in Delaware AND operate in Michigan, add $50 foreign-LLC + ongoing Michigan compliance.
VC fundraising
Delaware: most VC term sheets specifically require Delaware C-Corp (LLCs sometimes acceptable for intermediate stages, but typically convert before Series A closes). Michigan: VCs will often ask you to redomesticate to Delaware BEFORE wiring funds. This is the most common reason founders move to Delaware.
Case-law depth
Delaware: Court of Chancery hears business disputes with experienced judges and no juries. The deepest body of business case law in the country. Sophisticated investors price this predictability into their term sheets. Michigan: general courts handle business disputes; case law is less developed than Delaware.
Asset protection
Both Delaware and Michigan offer charging-order protection. Delaware: explicitly designates charging order as the SOLE remedy by statute, including for SMLLCs. Michigan: standard charging-order protection; SMLLC case law less developed.
Privacy
Delaware: members not disclosed on Certificate of Formation. Only Registered Agent appears on public record. Michigan: typically requires manager/member disclosure on Articles or annual report.
When Michigan wins
You operate a business in Michigan with no plans for VC fundraising. You serve local customers, hire local employees, lease local space. Forming in Michigan avoids the dual-state foreign-LLC overhead. For most operating businesses without VC ambitions, the home state is the right answer.
A clean handoff, in 5 steps.
Define your trajectory
Are you VC-track or bootstrap? Are you a holding entity or operating company? Are you preparing for an exit? The right answer depends on your trajectory.
Identify where you operate
If you have employees, a lease, or customers physically in Michigan, you do business in Michigan for foreign-LLC purposes. You cannot avoid Michigan registration by forming in Delaware.
Run the dual-state math
Delaware formation ($110 + $300/yr) + Michigan foreign LLC (~$50 + ongoing) = TWO sets of state filings and fees. Compare to single Michigan formation ($50 + 25/yr).
Consider Delaware as VC pre-positioning
If you are pre-raise but expect Series A within 6-12 months, forming in Delaware now avoids the migration later. Cost: ~$300/yr in extra franchise tax during the build phase.
Pick and form
If Delaware: we form your DE LLC + Delaware Registered Agent. If Michigan: we form your Michigan LLC. Either way our service fee is $0; state fees pass through.
Formation is free. Everything else is optional.
We do not charge a service fee to form your LLC or Corporation. State filing fees still apply and pass through at cost. Add the Compliance Bundle to handle the year-one filings everyone needs.
- LLC or Corporation formation (any state)
- EIN application with the IRS
- Articles of Organization or Incorporation drafted and filed
- Free BOS dashboard for ongoing visibility
- Filing receipts to your document vault
- Everything in Free Formation (no add-on fee)
- Registered Agent service in your state (1 entity)
- Annual Report AutoFile, filed every year on time
- Certificate of Good Standing (1 included per year)
- 1 Amendment included per year (address, member, name)
- Operating Agreement (LLC) or Bylaws (Corp)
- Deadline monitoring across all your filings
Common questions.
Should I form my LLC in Delaware or Michigan?
Form in Delaware if you are VC-track, want sophisticated investor signaling, or are building a holding structure that benefits from Court of Chancery case law. Form in Michigan if you operate locally and have no VC ambitions.
Why do venture capitalists prefer Delaware?
Delaware corporate law is the deepest and most-tested. Court of Chancery hears business disputes with experienced judges and no juries — predictable outcomes. Most VC term sheets specifically require Delaware C-Corp; even sophisticated LLCs often form in Delaware to avoid friction during diligence.
Can I form in Delaware and avoid Michigan state income tax?
No, unless you genuinely have no nexus in Michigan. If you live in Michigan and operate from Michigan, you owe Michigan state income tax on your share of LLC income regardless of where the LLC is formed. State tax follows where you live and operate, not where the entity is registered.
Is Delaware really worth $300/yr franchise tax over Michigan?
For VC-track businesses: yes. For sophisticated holding entities: usually yes. For local operating businesses with no VC ambitions: usually no — the $300/yr is pure overhead.
What is the Delaware Court of Chancery and why does it matter?
Specialized business court that hears corporate disputes without juries. Judges are experienced in business law. Case decisions are widely cited as precedent. Investors and acquirers price this predictability into deal terms — companies in Delaware face less uncertainty in major disputes than companies in general-jurisdiction courts.
Can I move my Michigan LLC to Delaware later?
Yes via domestication (where Michigan allows outbound domestication) or merger (always available). See our redomesticate-to-delaware-michigan guide for the full path.
Does Delaware offer better anonymity than Michigan?
Delaware does not require member disclosure on the Certificate of Formation — only the Registered Agent appears on the public record. In Michigan, manager or member disclosure is typically required on Articles or annual report.
How much will the dual-state Delaware + Michigan structure cost?
Delaware: $300/yr franchise + $99/yr Delaware Registered Agent. Michigan: $25/yr annual report + $99/yr Michigan Registered Agent + Michigan foreign-LLC compliance. Typical total: $500-$700/yr ongoing across both states.
What is the Delaware franchise tax for an LLC?
$300 flat per year, due June 1, regardless of revenue or activity. One of the most predictable state-tax bills in the country. Delaware does not require LLCs to file an annual report — just pay the franchise tax.
Where to next?
Every filing connects into your File.Business operating system. Pick where to go from here — we keep the rest tracked.