What should I take into consideration when deciding which state to incorporate in?

I'm interested in knowing more because I plan to do business in more than one state. I've heard that Delaware is a great state to incorporate in but I don't live there. What should I take into consideration when deciding which state to incorporate in?


Delaware's laws are friendly to the company and shareholders and predictable and familiar to investors. Costs are low. For these reasons, this is the most common state of incorporation. Unless you have a compelling other reason, this would be the most logical choice.

Absent regulatory reasons, relating to your industry, there is no reason to incorporate in the state where you are located.

Answered 9 years ago

My business partner and I just researched and made the same decision. The factors we felt were most important included: filing fees, taxes, business friendly laws and statutes, and our physical location. Delaware, Nevada, and Wyoming are often listed as the top states to incorporate. Delaware is often selected because it has some of the most pro business statutes. Nevada has low taxes and filing costs.

Physical location can be very important. If you incorporate in Delaware and are physically located in another state - you will be classified as an out of state filer in Delaware, may pay additional filing fees, need to appoint a registered agent in Delaware, qualify as a foreign filer in your home state, etc. As a result, Delaware's benefits may be more applicable to a large, public corporation.

In addition, we found that taxes will be determined based on your business transactions, assets, and other factors. As such, incorporating in a state with low taxes does not necessary mean you will pay low taxes. You will also need to register in each state you conduct business (e.g., material sales, recurring sales, assets, employees).

There are lots of factors to consider. A good CPA can prove to be a valuable resource in making this decision.

Answered 9 years ago

Hi, I have started over 10 companies in the last 25 years and am very experienced in starting, structuring and deciding where and how to set up companies.

Delaware and Nevada are good because they do not have a residency requirement. So you can live anywhere and incorporate in either of those states.

Other states you would need to check the fees and structures. This is most easily done by going to your Secretary of State online website. Most other states will require a physical presence and residence in that state.

If you would like me to check your state or should you need assistance with this or any other business project, don't hesitate to contact me.


Answered 9 years ago

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