Why Incorporate in Delaware
Why incorporate in Delaware – What’s all the hype?
by Drake Forester
Delaware Incorporation Advantages:
Delaware has corporate laws that allow flexibility in conducting business; such as, they allow a single-member board of directors. Delaware also allows complicated mergers to be done with ease. This could be handy in transactions where speed is necessary relating to financing or contracts.
Delaware has pretty good limitations of liability for corporation officers and directors and LLC members and managers.
Delaware has a court system called ‘The Court of Chancery’ that is completely unique to the state. It specializes in settling corporate disputes. The court is made up of a Chancellor and four Vice Chancellors that act as mediators. The system is popular with business organizations, and is the MAIN reason big corporations want to incorporate in Delaware. There is so much case history that companies can really understand the outcomes of their business decisions if they ever end up in court in Delaware. The Delaware Chancery Court is so stable that two well-experienced Delaware lawyers representing two sides of a dispute probably know with a lot of certainty how a dispute will end up before it gets very far down the legal road.
Delaware Incorporation Disadvantages:
The filing fees in Delaware are more expensive than many other states. If you are operating from a different state you may likely have to qualify your business there also as a foreign entity, which can be hundreds of dollars, and then you have to maintain two state registrations. It may not be cost effective to form your organization in Delaware if you conduct business in your home state in a physical location that may have employees showing up to work at that location.
Delaware does charge you Delaware State income tax if you don’t do business in Delaware. The Delaware annual franchise tax filing fees are higher for big companies with lots of shares.
There is no sales tax in Delaware, which is nice if you live there. If you’re thinking about incorporating in Delaware, the odds are that you don’t live in Delaware and will never benefit from this. States need money and as a business that operates in 51 states, we can guarantee you there is no free ride. If a state doesn’t have sales tax, it usually means fees are high in that state and the state needs to make money elsewhere. They charge you $50 to get a certificate of good standing, which they will then mail to you, unless you provide a FedEx number or pay someone to get it for you.
So, ‘Should or Shouldn’t I Incorporate in Delaware?’
If after reading all of this you’re still asking yourself, “Why incorporate in Delaware,” see if the advantages outweight the disadvantages. If they do then incorporating in Delaware is your next step. But, no matter which state you decide on, we offer local registered agent service in every state, including the District of Columbia. If you would like us to help you incorporate, it’s only $100 for us to complete the business filing for you. Simply click on one of the ‘Sign Up’ buttons below to get started!