It’s true – states offer different incentives for a company to choose them as its state of incorporation or operation. The decision is not quite like picking from a menu at a restaurant though. Determining which state is the best for your e-commerce business requires a look at many factors and is best done in consultation with an attorney who has experience setting up this type of online marketplace.
Sometimes, it makes the most sense to operate out your home state because it would be the easiest logistically. On the other hand, maybe your home state has some unfavorable rules about e-commerce businesses that could hurt you down the road. In that case, maybe you want to operate out of a foreign state. Some states, like Delaware, Nevada and Wyoming, for example welcome new businesses and their potential taxes so they want to entice owners to operate there.
You should look at the tax structures of different states and compare how they will apply to your company as you start to grow your revenues. Is it a progressive tax? Is it a flat tax? Is there a tax on your intangible property? Figure out which structure works best for you.
Generally speaking, a majority of e-commerce companies, including Amazon and EBay, are incorporated in Delaware. Delaware’s laws provide certain tax incentives and the barriers to entry are low, making it easy to start as well as maintain a corporation in Delaware. Nevada has attempted to model its laws after Delaware’s, so a lot of these same advantages can be acquired by incorporating in Nevada as well. sta
These are only a few of the factors to be considered. Again, it is best to consult with an experienced attorney who can help you through them. Feel free to visitto schedule a free consultation with an experienced business attorney!