A recent LawTrades user asked: I am applying to startups. What are the advantages of Incorporating in Nevada over Delaware?
Many entrepreneurs contact LawTrades wondering whether to form their business in Delaware or Nevada. Because both offer certain legal and tax advantages, it’s no surprise that over half of all fortune 500 companies are formed there. With that said, you need to take a close look at your business and it’s objectives in order to figure whether to file in DE, NV, or your own home state. Also, it’s in your best interest to get legal guidance and not simply rely on what you find online.
Some businesses choose to incorporate in Nevada over Delaware because of its perceived looser corporate law, which is very protective of directors and board members. This lax law is especially attractive to businesses whose home state’ laws have an anti-management view and therefore seek greater protection in the state they incorporate in. The Secretary of State for Nevada provides a full list on its website of reasons why it “ranks as the top state for commercial filings and the benefits of doing business in NV, including the favorable tax structure.” Interestingly, the site also states that Nevada corporate law was “developed on the Delaware model” so it is safe to say that both states’ laws overlap each other in many regards.
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