It can be intimidating to choose a state to incorporate in. You don’t need to incorporate in the state where your business physically resides. Instead, you can incorporate anywhere. Which is the best state to incorporate in? Here are some things to consider.
Things to Consider When Choosing a State to Incorporate
What is the best state to incorporate? Many people choose Delaware to incorporate their LLC or corporation. Choosing to incorporate in Delaware means that Delaware law will govern the internal affairs of the company, including owner versus manager disputes. Furthermore, by incorporating in Delaware, you have access to the Delaware Court of Chancery, a specialized internationally respected business court that makes expedient and well-reasoned decisions that serve to reinforce the state’s already resolute statutes. Some of the best business attorneys in the country become judges on this court. Incorporating in any other state may result in your case being decided by capricious juries or having inexperienced generalist judges considering your case without the depth, protection or sophistication of Delaware law.
Benefits of Incorporating in Delaware
Incorporating a business in Delaware provides economically valuable benefits to the parties involved which are superior to those of any other state. Delaware corporations range from single-person consulting companies up to multi-national conglomerates. It is no surprise that more than 65 percent of Fortune 500 companies and over half of the publicly-traded companies in the United States are incorporated in Delaware.
Delaware is not just a desirable home for corporations. It is also coveted as the superior home for LLCs, which, for example, may be why both Hillary Clinton and Donald Trump have dozens of Delaware LLCs.
Protections Under Delaware Law
First and foremost, the reason to incorporate in Delaware is because of the many protections offered by Delaware’s laws and courts. Delaware’s strong and well-proven asset protection shield protects the personal assets of company owners. This shield protects both Delaware corporations and Delaware LLCs. Additionally, if incorporated in Delaware, a business manager is protected from business owner lawsuits, even if a particular business decision results in a loss to the company. This is known as the “Business Judgment Rule”. It encourages risk-taking on the part of managers who may operate freely, without concerns of personal recourse liability. This gives business managers the freedom to pursue opportunities for higher rates of return and increased growth. Delaware courts have a balanced approach to promoting shareholder value while protecting managers. Accordingly, the United States Chamber of Commerce has ranked Delaware’s business liability protection #1 in nearly every ranking since periodic rankings began in 2002.
Ease of Incorporation
Choosing to have your business governed under Delaware law is easy. No matter where you do business, its internal affairs will be governed by Delaware law and courts simply by filing the initial incorporation or formation certificate for the business with the Delaware Secretary of State. Although a business may not have an office in Delaware, it is easy to incorporate here as long as the business has a Registered Agent in Delaware, such as IncNow. There is no need to have a bank account in Delaware, or even have a business address within the state. The duty of a Delaware Registered Agent is to forward annual notices and court notices to the business wherever it may operate.
Protection for Businesses
The predictability of business law and courts in Delaware enables corporations and LLCs to structure their businesses confidently. This consistent high degree of certainty and integrity delivers added value to business owners. Delaware offers great protection even when only one individual serves as the Director, President, Secretary, Treasurer and sole shareholder of a corporation or the sole member and manager of an LLC.
Delaware’s Outstanding Customer Service
Lastly, the Delaware Division of Corporations’ office provides outstanding customer service. This includes options for expedited document approval and filing in as little as 30 minutes. The Secretary of State of Delaware runs two shifts to maintain extended hours to keep the filing office open well-past regular business hours. Unlike the stereotypical image of government service as slow, unpleasant, and ineffective, the Delaware Division of Corporations consistently delivers efficient, quality service with you and your business as their priority.
Best for You, Best for Your Business
When you choose your business’s legal home, you would be wise to file in Delaware. Only Delaware offers the outstanding protection of both superior laws and courts, helping to ensure your assets remain protected and your decisions respected, whether a corporation or an LLC. Delaware provides ease both at start-up and in operation as only Delaware offers such an incomparable level of service and support. Therefore, when incorporating you should choose Delaware as the legal home of your corporation or LLC with confidence because for business, Delaware is the first state.