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Delaware vs all others

Who should form a Corporation in which State

Delaware

Delaware's flexible pro-business laws, renowned court system, and privacy protection make it ideal for incorporation. Tax benefits and added prestige attract investors and enhance credibility.

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Other States

Choosing a state other than Delaware may offer local advantages, easier compliance with state-specific regulations, access to regional resources, and targeted incentives tailored to local industries.

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Delaware Pros & Cons

  • Favorable business laws > Delaware's pro-business corporate law offers flexibility in company structuring. The renowned Delaware Court of Chancery efficiently handles corporate disputes, leading to faster, more predictable outcomes

  • Privacy protection > Delaware corporations enjoy enhanced privacy, with no requirement to disclose directors' and officers' names publicly, providing anonymity for company management

  • Tax benefits > Delaware provides tax benefits for companies, including no state corporate income tax for out-of-state operations, no personal income tax for non-residents, and no value-added taxes

  • Efficient incorporation process > Forming a company in Delaware is simple, fast, and cost-effective, with the efficient Delaware Division of Corporations often completing formations within 24 hours

  • Prestige and credibility > Delaware's pro-business environment and association with Fortune 500 companies make it synonymous with corporate prestige, enhancing credibility for investors, customers, and partners

  • Annual taxes > Delaware corporations and LLCs are required to pay annual taxes which can be a disadvantage to startups

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Delaware use cases

Suraj started a software business in Washington and wishes to raise capital

Delaware is an attractive option for incorporating a C-Corp for founders who wish to raise capital, like Suraj. Not only do investors generally prefer to invest in Delaware C-Corps, Delaware’s well-defined corporate laws help provide stability for founders like Suraj.

Seo-Yun started a MedTech business in Illinois and wishes to join an accelerator

Sophisticated investors that participate in accelerator programs, such as the one Seo-Yun wishes to join, prefer to invest in Delaware C-Corps because Delaware offers lower taxes and predictable outcomes in shareholder disputes. Since one of the big advantages of joining an incubator or accelerator is the access to a pool of investors and advisors, if you plan on joining such a program, you should consider forming a C-Corp in Delaware.

Other States Pros & Cons

  • Local presence > For businesses primarily operating in a particular location, forming a business in that state simplifies compliance with state-specific rules and helps establish a local presence

  • Access to resources > Certain states may offer a larger talent pool, more industry hubs, and better access to partners, investors, and service providers in your industry

  • Innovation > Depending on your industry, some states may offer a stronger presence of industry leaders and peers, thereby fostering a more innovative business environment

  • State-specific incentives > Some states offer incentives and financial programs to support businesses in certain industries, such as tax credits, grants, and loans

  • Prestige and credibility > Forming a company in a particular state can boost your company's image If that state is widely recognized as a leader with an influential business community in your industry

  • Prestige and credibility > Forming a company in a particular state can boost your company's image If that state is widely recognized as a leader with an influential business community in your industry

  • Taxes and regulation > Many states are known for high tax rates and a complex regulatory environment which can be challenging for businesses

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Wyoming use cases

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Milosh started an e-commerce business in California

Milosh chose California for his e-commerce startup because he resides in the state. By forming his company in his home state, he is able to simplify compliance and thereby save on annual company maintenance costs

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Blair started a fashion brand in New York

Blair formed her fashion company in New York because of New York’s reputation as fashion capital and because she knew her first boutique would be located in New York city. By forming her company in the state where her physical business is located, she is able to reduce compliance costs while taking advantage of the incredible resources offered to fashion companies in New York.

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