Those laws are enforced in a unique court, the Delaware Court of Chancery. As a result, corporate officers and directors feel safe with their headquarters in Delaware. Delaware’s laws provide flexibility in management and shareholder rights that are typically not seen elsewhere. Most important may be the state’s favorable corporate laws. When you look into the reasons why so many companies, large and small, are incorporated in the state, you’ll find that it’s not simply due to “tax loopholes.”Ī wide range of factors makes Delaware an attractive option, especially for corporations that operate nationwide across the US or internationally. This reputation continues up to this day, giving a Delaware corporation an advantage when new companies are looking to set up shop. Why Do So Many Companies Incorporate in Delaware?ĭelaware has a long history of being a preferred state for business incorporation. So, in which state should you incorporate?
Three other states-Nevada, Oregon, and Wyoming- have also decided to make incorporation in their state more appealing. Historically, in the U.S., Delaware is considered “the place” to establish your corporate entity as there’s no Delaware sales tax. From startups to public enterprises, your bottom line is affected by your state of incorporation’s corporate income tax, excise (sales and use) tax, sales tax, physical and economic nexus tax, franchise tax, and gross income tax. Incorporation is a critical legal matter that impacts more than your company’s tax responsibilities for doing business.
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