State Of Incorporation
Having made the decision to incorporate your business, the state of incorporation is now one of the more
important decisions that remains to be made.
In general terms, if your business is relatively small and and only likely to ever trade in your current
state of residence, the probability is that your own state is the most suitable for incorporating your
However, if you are looking to grow your company across a number of states or nationally, then other US states
such as Delaware or Nevada may well provide you and your business with significantly more benefits going forward
and both should be seriously considered before your final decision as to where to incorporate is made.
Over half of all large US companies are officially incorporated in Delaware.
The state offers many advantages and benefits to companies incorporated there, here are some of the more
- Delaware corporate law is very advanced and business friendly, in fact the majority of US corporate law
has been written as a result of cases heard in Delaware.
- As the owner, you are not required to be a resident of the state, but state law requires you to have a
registered agent in Delaware (the agent may be an individual or corporation as long as they have
Delaware residency). Most incorporation services will offer an Agency service.
- Incorporation fees in Delaware are low compared to some other states. Minimum required bank deposits
are only $1,000.
- Corporations incorporated in Delaware but operating elsewhere do not pay Delaware state income tax.
Non residents pay no state tax on stock transfers.
- Shareholder and officers personal information is not made public in Delaware.
In summary, the above are just some of the more sigificant reasons why so many US companies decide to file their
articles of incorporation in the business friendly state of Delaware, popularly known as the incorporation capital
The other popular alternate State to Delaware, is Nevada.
In order to be able to incorporate in Nevada, a business must be able to demonstrate that it is actually
operating out of the state, and as such is required to have a permenant business address in the state and a local
bank account. Professional incorporation services will help you meet these requirements.
Like Delaware, Nevada is very business friendly for the following reasons:
- Nevada is a very tax friendly state similar to Delaware with no taxes on corporate or private income, or on
- No IRS sharing agreements
- Directors and officers are not required to be residents
- Minimal reporting and disclosure requirements
- Corporations can buy and sell shares of their own stock
- No minimum capital requirements
Nevada and Delaware offer many similar benefits to companies looking to incorporate. Professional legal
advice should be sought in order for the complex tax benefits and laws to be fully understood, so that the best
decision can be made for your particular business, and as stated at the beginning of this article, small businesses
may well be best advised to simply incorporate in their own state.
This article is for informational purposes and general guidance only, it should not be relied on and
professional legal advice should always be sought prior to making legal decisions affecting your business.