Learning Center
Everything you need to know about Corporations, LLCs and Trademarks.
Learning center
Everything you need to know about Corporations, LLCs and Trademarks.
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Where to incorporate
Your State
Incorporating in your home state is usually the preferred choice because it is the least costly and least complicated. For example, if you incorporate in a state other than your state of operation you may have to qualify to do business in your home state as a "foreign corporation." Also, if you incorporate and operate in different states you may have to file annual reports in both states and may have to pay income and franchise tax in both states. Incorporating in your state of operation will simplify procedures and cut back on these redundant costs.
Finally, incorporating in your state of operation will allow you, or someone closely associated with your company, to serve as your company's resident agent. Naming yourself or someone associated with your company as resident agent ensures that you will personally receive important documents without wasted time and money.
The Delaware Option
Delaware has the longstanding reputation as the best state in which to incorporate. Thousands of start-up companies make this choice every year, despite the fact that they operate completely or partially in states other than Delaware. The upfront benefits of incorporating in Delaware are applicable to both large and small businesses. For example, Delaware offers low incorporation and franchise fees. Additionally, companies which conduct all business outside of Delaware are not subject to Delaware state income tax. Management Flexibility is also an advantage, as Delaware allows a corporation with fewer than 30 shareholders to be managed directly by the shareholders.
Although Delaware incorporation may be beneficial to any size company, it is the larger companies that have the most to gain. For instance, Delaware incorporation is advantageous to companies who intend to offer their shares to the public. For this reason the majority of companies on the New York Stock Exchange, as well as 58% of Fortune 500 companies, are incorporated in Delaware.
Also, if you choose to incorporate in Delaware, you may have to "qualify" to do business in other states that you operate in. This means that you will probably have to qualify to do business in your business' home state. Further, you may have to file annual reports in both Delaware and your home state of operation, and will likely be subject to franchise taxes in both states. The cost and complexity of the dual reporting requirements are more easily absorbed by larger companies.
If you choose to incorporate in Delaware but do not have a physical street address within the state, Direct Incorporation can provide you with dependable Delaware resident agent services.
The Nevada Option
In recent years, Nevada has gained recognition for its favorable corporate laws. As such, a growing number of out of state businesses choose to incorporate in Nevada. The tax savings of incorporating in Nevada is one advantage. Nevada does not tax corporate profits, there is no state personal income tax, and there is also no franchise tax.
Shareholders of a Nevada corporation also enjoy the benefit of complete privacy. In contrast to most states, Nevada has minimal reporting and disclosure requirements. For example, Nevada does not require shareholders to be listed on public record, as most states do.
However, like Delaware incorporation, larger corporations have the most to gain from incorporating in Nevada. In fact, for smaller corporations, the disadvantages of Nevada incorporation may outweigh the benefits. For example, if you choose to incorporate in Nevada and mainly operate in another state, you may have to "qualify" to do business in that other state. Furthermore, all states have annual reporting requirements, and although Nevada's requirements are minimal, it is generally less complicated to deal with the reporting requirements of just one state- your state of operation- rather than two.
If you choose to incorporate in Nevada but do not have a physical street address within the state, Direct Incorporation can provide you with dependable Nevada resident agent services.
Incorporating in your home state is usually the preferred choice because it is the least costly and least complicated. For example, if you incorporate in a state other than your state of operation you may have to qualify to do business in your home state as a "foreign corporation." Also, if you incorporate and operate in different states you may have to file annual reports in both states and may have to pay income and franchise tax in both states. Incorporating in your state of operation will simplify procedures and cut back on these redundant costs.
Finally, incorporating in your state of operation will allow you, or someone closely associated with your company, to serve as your company's resident agent. Naming yourself or someone associated with your company as resident agent ensures that you will personally receive important documents without wasted time and money.
The Delaware Option
Delaware has the longstanding reputation as the best state in which to incorporate. Thousands of start-up companies make this choice every year, despite the fact that they operate completely or partially in states other than Delaware. The upfront benefits of incorporating in Delaware are applicable to both large and small businesses. For example, Delaware offers low incorporation and franchise fees. Additionally, companies which conduct all business outside of Delaware are not subject to Delaware state income tax. Management Flexibility is also an advantage, as Delaware allows a corporation with fewer than 30 shareholders to be managed directly by the shareholders.
Although Delaware incorporation may be beneficial to any size company, it is the larger companies that have the most to gain. For instance, Delaware incorporation is advantageous to companies who intend to offer their shares to the public. For this reason the majority of companies on the New York Stock Exchange, as well as 58% of Fortune 500 companies, are incorporated in Delaware.
Also, if you choose to incorporate in Delaware, you may have to "qualify" to do business in other states that you operate in. This means that you will probably have to qualify to do business in your business' home state. Further, you may have to file annual reports in both Delaware and your home state of operation, and will likely be subject to franchise taxes in both states. The cost and complexity of the dual reporting requirements are more easily absorbed by larger companies.
If you choose to incorporate in Delaware but do not have a physical street address within the state, Direct Incorporation can provide you with dependable Delaware resident agent services.
The Nevada Option
In recent years, Nevada has gained recognition for its favorable corporate laws. As such, a growing number of out of state businesses choose to incorporate in Nevada. The tax savings of incorporating in Nevada is one advantage. Nevada does not tax corporate profits, there is no state personal income tax, and there is also no franchise tax.
Shareholders of a Nevada corporation also enjoy the benefit of complete privacy. In contrast to most states, Nevada has minimal reporting and disclosure requirements. For example, Nevada does not require shareholders to be listed on public record, as most states do.
However, like Delaware incorporation, larger corporations have the most to gain from incorporating in Nevada. In fact, for smaller corporations, the disadvantages of Nevada incorporation may outweigh the benefits. For example, if you choose to incorporate in Nevada and mainly operate in another state, you may have to "qualify" to do business in that other state. Furthermore, all states have annual reporting requirements, and although Nevada's requirements are minimal, it is generally less complicated to deal with the reporting requirements of just one state- your state of operation- rather than two.
If you choose to incorporate in Nevada but do not have a physical street address within the state, Direct Incorporation can provide you with dependable Nevada resident agent services.
