Why should a startup not incorporate in Delaware, and rather incorporate in their home state?

My answer to Why should a startup not incorporate in Delaware, and rather incorporate in their home state?

Answer by Raad Ahmed:

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.

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.

If you’d like additional guidance about where and how to incorporate your company, please feel free to take a look at 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.

Why should a startup not incorporate in Delaware, and rather incorporate in their home state?

Legal is hard. Let’s tackle it together.

Speak to one of our Legal Pros and discover how we can help.

Let's Talk