Why Incorporate In Delaware?

Why Incorporate In Delaware?
If you're about to start the process of incorporating your
company, you need to give some thought to which state you
are going to incorporate it in. Your home state does not
have to be your state of incorporation, you can in fact
incorporate your business in any of the states within the
US. For larger businesses there are advantages to
incorporating outside of your home state, with Delaware in
particular offering a number of benefits.

Before we discuss the benefits of incorporating outside of
your own state, and in particular in Delaware, you should
first consider whether incorporation outside of your home
state is a viable option at all.

If your company is relatively small, any potential
advantages of incorporating outside of your own state may
be outweighed by the costs of doing so. In general you
should stick to your own state if your business is small.

One of the costs you will incur are those of an agent to
represent you in the state you choose. When you
incorporate in a state other than your own, your company
will be considered as a foreign corporation within that
state, and as such, you'll be required to appoint an agent.

Also, you should consider your geographical trading area.
If your business is based solely on your home state, it
will probably make most sense to incorporate there. But if
you trade across multiple states, incorporation elsewhere
may make sense.

So, why incorporate in Delaware? What are the advantages
that make Delaware such a popular state for incorporating
in?

1.Delaware offers favourable tax treatment in the form of
low franchise taxes and no state corporate income tax for
companies that operate outside of Delaware

2.Delaware has low incorporation fees

3.Delaware courts are very pro-business and support
companies incorporated in the state, with much of its
corporate law written to protect the rights of shareholders

4.There is no minimum capital requirement when
incorporating, and only one incorporator is required

5.The state has no sales tax, personal property tax, or
intangible property tax on companies incorporated there

6.A company can keep its books and records outside of the
state

Because of all these advantages, over 250,000 companies are
incorporated in Delaware. In fact over fifty percent of
all companies trading on the New York Stock Exchange are
Delaware corporations.

You should seek qualified legal advice before deciding to
incorporate outside of your own state, and then decide
whether or not you will benefit from the advantages above.

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Richard Taylor MBA is a Chartered Management Accountant and
Company Director with a specific interest in small business
start ups. You can read more about choosing your state of
incorporation at:
http://www.incorporate-my-business.com