Many business owners choose to incorporate in the state in which they are conducting business. If business will be conducted in another state the corporation must qualify to do business in that state. For instance, if one formed a Nevada corporation but the business would be doing business in California, the corporation would also have to qualify to conduct business in California. In order to qualify, one must draft the appropriate legal documents and the corporation must register with the state, and pay the associated filing fees (called “foreign qualification”). General Corporate Services can help you to qualify your corporation do to business in additional states.
Where to Incorporate
Why incorporate in my home state?
The Benefits of Incorporating in Delaware
The State of Choice – More than 50% of the Fortune 500 companies and nearly half of the companies on the New York Stock Exchange are incorporated in Delaware.
- Speed – A Delaware corporation can be formed in 24 hours by phone or internet. For an extra fee, Delaware has a 1 hour and a 2 hour incorporation option.
- Legal Protection – Delaware has a special court called the “Court of Chancery” that only sees corporate law cases. This court uses judges that specialize in corporate law. Therefore, the decisions tend to be more consistent than courts that use juries. This may decrease lawsuits for the following reason: Rather than litigate, many attorneys will settle disputes out of court by referring to the decisions in similar cases.
- One Person Corporation or LLC – Delaware law allows one person to hold all offices and allows one person to be the sole shareholder of a corporation or sole member of a limited liability company.
- Tax-Savings – There is no income tax in Delaware when the corporation operates outside of the State. (There may be taxes in the state of operation.)
- Flexible Ownership – You do not have to be a resident of Delaware or a U.S. citizen to own and operate a Delaware corporation.
- Low-Startup Cost – The costs for form a Delaware corporation or LLC are among the lowest in the US.
- Can Do Business in Any State – A Delaware corporation, like corporations formed in other states, may conduct business an any state. There are some minimum filing requirements called “foreign qualification.” General Corporate Services can assist in the foreign qualification process.
- Raising Capital – Delaware corporations may trade stock for capital, services, personal property or real estate, including leases and options. The directors may determine the value of the transactions.
- Business Friendly Laws – Delaware corporate code provide substantial protection for officers, directors and shareholders of a Delaware corporation or LLC.
- Low Annual Cost – The annual filing fee requirement on a Delaware corporation are one of the lowest in the US.
Do I have to live in Delaware?
No, you do not have to live in Delaware. A corporation is required to maintain a registered agent within the state. (General Corporate Services provides this service.)
How quickly can I incorporate in Delaware?
Unlike other states where incorporation may be an extended process, Delaware has gone to great lengths to expedite proceedings with its 1-hour, 2-hour, same day and 24-hour processing and document filing.
Delaware corporations benefit from the exceedingly low annual franchise taxes. Annual franchise tax obligations could be as low as $30 annually.
Delaware uses the Authorized Shares Method for Franchise Tax Calculation:
Less than 3,000 shares (minimum tax) $30.00
3,001 – 5,000 shares $50.00
5,001 – 10,000 shares $90.00
Each additional 10,000 shares $50.00 Delaware Corporation Annual Report
Delaware Corporation Annual Report
Annual reports are required to be filed annually on or before December by a registered agent of the corporation. The filing fee is $20.
The Benefits of Incorporating in Nevada
- Speed – A Nevada corporation can be formed in 24 hours by phone or internet.
- Privacy – The stockholders of a Nevada corporation are not in the public records.
- Anonymity – Nevada allows “Bearer Stock Certificates.” You have the option of writing your name on the stock certificate or the words “The Bearer.” This may provide relief by handing the stock certificates to a trusted friend or relative when your ownership of the stock is threatened.
- Tax-Savings – When combined with the Nevada Office Program and Nominee Privacy Service, a Nevada corporation operates in Nevada state TAX-FREE.
- Corporate income TAX FREE
- Franchise TAX FREE
- Capital stock TAX FREE
- Corporate share TAX FREE
- Estate TAX FREE
- Inventory TAX FREE
- Personal income TAX FREE
- Stock transfer fee or TAX FREE
- Inheritance TAX FREE
- Gift TAX FREE
- Flexible Ownership – You do not have to be a resident of Nevada or a U.S. citizen to own and operate a Nevada corporation. You can operate a Nevada corporation anonymously to protect your assets and your privacy. A Nevada corporation may purchase, hold, sell or transfer shares of its own stock.
- Tax Privacy – Nevada is one of the only states that does not have a formal information sharing agreements with the Internal Revenue Service. This may protect you from a discrepancy between a state and federal computer.
- Low-Startup Cost – There is not a minimum capitalization requirement. A Nevada corporation can be organized without any cash or tangible capital if desired, other than the necessary costs of starting a corporation.
- One Person Corporation – One person can serve as all officers and be the sole director of the company. A one person corporation is acceptable in Nevada.
- Can Do Business in Any State – A Nevada corporation, like corporations formed in other states, may conduct business an any state. There are some minimum filing requirements called “foreign qualification.” General Corporate Services can assist in the foreign qualification process.
- Raising Capital – Nevada corporations may trade stock for capital, services, personal property or real estate, including leases and options. The directors may determine the value of the transactions.
- Business Friendly Laws – Nevada corporate code was completely revised in 1991 and improved again in 2001, making the entire incorporation process quicker, more efficient, with greater liability protection for corporate principals than ever before.
- Estate-Planning – There is no estate tax in Nevada. Shares owned by non-residents of Nevada are taxed only in the state in which they live.
- Ease of Operation – With proper notification, stockholders, directors, or committee members may act by unanimous consent in lieu of formal meetings.
- Flexibility of Dividend Payments – Corporations can pay dividends out of profits as well as surplus.
- Flexibility of Business Purposes – One corporation may conduct different kinds of business. If the documents filed for the Nevada Corporations have the broadest type “purpose clause” any legal business activity may be conducted.
- Flexibility of Operation – The director(s) has the power to create or alter bylaws.
- Strong Liability Protection – Officers and directors of a Nevada corporation can be protected from personal liability when acting on behalf of the corporation.
- Low Annual Cost – The annual filing fee requirement on a Nevada corporation is only $85 a year.
- Lending Flexibility – There is no usury law in Nevada, meaning a corporation may charge as much interest as it wishes.
- Strong Protection History -There has never been a case in which a Nevada corporation’s veil has been pierced when the corporation has been operated property. In fact, unless there has been intentional fraud, the Nevada courts very rarely allow a corporate veil to be pierced.