• October 2019
    M T W T F S S
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What is the best state to incorporate a startup?

If you’re not planning to raise or go public, your home state will usually provide you with the most advantages and favorable business treatment. In fact, in certain industries, incorporating in-state will not only be your best option, but also might be your only option. More on that here.

It’s true that Delaware dominates the incorporation landscape and is often an automatic default for new entities. But that shouldn’t always be the case. Delaware requires you to maintain a registered agent with a physical address in Delaware, which can add some expense. Additionally, all Delaware corporations are required to pay annual franchise taxes. These taxes are based on the company’s share value and range from $75 to $180,000 — plus a $50 filing fee. Furthermore, Delaware has mandatory annual reporting requirements, which you’ll need to file in addition to those in your home state or states where you are doing business.

Other states worth mentioning:

  • Nevada: There’s no franchise tax, no corporate income tax, and no personal income tax. Interestingly, there’s protection against hostile takeovers. Like Delaware, Nevada doesn’t require a company to hold board or business meetings there. Minimum cost to start-up is $400 though.
  • Wyoming: Initial costs for setting up a corporation is about $150. Low taxes each year. Drawback? Not as much case law exists in this state so judges are left with more decision-making power than DE and NV.

If you’d like additional guidance about where and how to incorporate your company, please visit LawTrades. Our legal platform makes it easy to connect with a quality business attorney to help you launch your business. Also feel free to message me directly with any questions or concerns you might have about the incorporation process.