INCORPORATE IN DELAWARE: WHY IS IT IDEAL FOR YOUR BUSINESS

2007-03-08 10:33:40

( Business )



If you are deciding on a state of incorporation for your entity, Delaware must be on top of your list. Delaware is considered one of the most business-friendly states in the country. Here are some reasons why:

First, Delaware corporations can maintain a simple corporate structure. A minimum of one director is needed. In Delaware, an individual can serve as sole director and hold all officer positions (president, secretary and treasurer) at the same time. In addition, directors and officers do not have to reside in the state.

Second, the privacy of businesses that incorporate in Delaware is well-protected. Although the state has an information-sharing agreement with the IRS, it does not oblige corporations to disclose the names of officers, directors and stockholders. Corporate records need not be kept in the state.

Third, it is inexpensive to incorporate in Delaware. The initial charges of incorporating in Delaware are lower compared to the other states. Delaware sets no minimum capital requirement for corporate formation. You also need not maintain a bank account in the state.

The costs of continuing business operations are also quite affordable. Annual franchise taxes are minimal. In addition, shares of stock owned by non-Delaware residents are not subject to corporate income taxes.

Fourth, all corporate lawsuits in Delaware are handled by a separate business court—the Court of Chancery. In the Court of Chancery, judges preside on the cases. It does not make use of juries. The judges are not elected, but are appointed based on their expertise on Delaware’s General Corporation Laws.

It is advantageous to incorporate in Delaware because of the different corporate benefits that the state offers. But you should consider other factors as well. In the end, it is still most ideal to select the state which would perfectly meet the needs of your business.


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