A corporation is described as an entity that is created by a group of shareholders. Each shareholder owns part of the corporation, which is shown by the number of stock shares each holds, with the main goal to make a profit. But should you form a corporation in Delaware? There are some definite perks, which you may have heard of since the state is considered a tax haven. But that doesn’t mean it’s the best choice for your corporation. Should you incorporate it in Delaware? Read on to find out more.
Benefits of Incorporating in Delaware
If you’ve done your homework, you know that Delaware offers a lot of legal protection with its established corporate laws. This makes the state the Incorporation Capital of the World. The state’s courts use judges rather than juries, which has the distinct benefit of speeding up the entire process of incorporation. Because it’s so well-versed in corporate law, Delaware is also the most up-to-date with changes to the law.
In addition, there are tax savings to be had for businesses of certain sizes. While you may not save that much if you operate a small business, a larger corporation can take advantage of several substantial tax breaks. Delaware doesn’t have state income tax and stocks held by non-residents of the state are not subject to any Delaware state taxes.
If you’re operating outside the state of Delaware, you won’t need a business license in the state. There’s also a higher measure of security offered when you incorporate in Delaware. You can operate without providing the names of your officers, which protects personal information and increases privacy. This is appealing to many businesses and could be a good reason for you to incorporate in Delaware.
Disadvantages of Incorporating in Delaware
You might think there’s no reason not to incorporate in Delaware. Before you make a hasty decision, consider the disadvantages of doing so. As mentioned above, small businesses may not save enough money to make it worth it. At the same time, you’ll still have to pay franchise tax and hire an agent to help you through the process.
You’ll also still need to register in your own state and file reports in both, which doubles the work and doubles the cost when you do file. It’s also important to meet all of the requirements for incorporation set out by your state of residence. Additionally, the filing fees in Delaware are much higher than in other states, so you’ll need to prepare for that expense as well.
Ultimately, there is a range of fantastic benefits to incorporating in Delaware. If you operate a larger business, you could save a decent amount of money, while also offering privacy to your officers and stakeholders. However, it might not be your best bet if you’re a smaller entity. Do you need more information? Are you ready to get started? Contact Corporation Center.US today and we’ll help you get through the process to form a corporation in Delaware. Make the right choice for your business.