Why Do Companies Incorporate in Delaware? Top 5 Reasons and Startup Resources
Whether you’re new to small business or have been around for a while, you have probably heard that Delaware is the most business-friendly state to start a business. There are several major factors that lead companies to set up headquarters in the Diamond State. Small businesses and large corporations both benefit from Delaware’s progressive corporate laws, low tax burden, quality business services, and favor with investors. These are just a few benefits that make Delaware the world’s incorporation capital. Read on for the top reasons businesses incorporate in Delaware and find tips and resources to start registering your business today.
Top 5 Reasons Companies Incorporate in Delaware
1: Flexible Incorporation Process
Residence Requirements: Delaware does not require business owners to live in or keep a physical address as long as you have a Registered Agent.
Business Structure: Any Delaware business can be owned and managed by one person, which makes organizing the business simple. Flexible corporate laws offer premium liability protection to business owners.
Formation Costs: The cost to form a corporation or LLC in Delaware is one of the lowest in the US, and worldwide.
Because of residence flexibility and Delaware’s progressive business services, domestic and international companies can organize a business fast. The paperwork is straightforward and we can file online for you to speed up the process.
2: Investors Like Delaware Companies
Investors prefer to fund businesses that are formed in Delaware because the state laws protect their interests. The traditional C-Corporation is ideal for fast-track startups that want to attract venture capital investors. Most small businesses incorporate an LLC or Corporation to draw angel investors. Companies in other states will even register in Delaware to take advantage of investor opportunities. Investors offer funding with the intention of making money, so working with Delaware companies is the safest bet for their return.
TIP: The Internet is full of angel investment networks and crowdfunding platforms. Opportunities to both raise funds and invest in other businesses can be found on sites like SeedInvest, Kickstarter, and startengine.
Find out how to Foreign Qualify your business in Delaware
3: Delaware’s Low Tax Burden
Taxation can make or break a small business. If you operate in a state with high taxes, you’ll have to build those costs into your pricing, which could discourage sales. Higher taxes and fewer sales can spell disaster for a startup. Delaware doesn’t have state or local sales tax, and the corporate tax rate is lower than in many other states. This means you can keep pricing for products and services lower, drawing more business, which generates higher profits. Low taxation is a key benefit to Delaware companies.
Ask our tax partners which entity type is right for your company
Helpful Startup Resources
The Delaware Startup Challenge | 12 Steps to Start a Business in Delaware | The Effective Business Plan
4: Delaware Businesses Benefit from Favorable Corporate Laws
The state of Delaware is known around the world for its judicial branch and expertise in impartially deciding corporate cases. Business disputes are handled by the Court of Chancery and tried by judges, not juries. The overall system is favorable toward businesses and designed to resolve legal matters efficiently. Delaware’s advanced legal and business authorities make it fast and easy to form an LLC or Corporation. Find out more about starting a business in our Delaware Startup Guide.
5: Privacy Protection for Owners
Unlike some states, Delaware does not require business owners to be listed on articles of organization (LLCs) or incorporation (Corporations). The only name and address information required is the name of the company and the name and address of your registered agent.
You can also form what are called “series” LLCs, which is one parent LLC and a number of sub-LLCs. The advantage to forming series LLCs include flexibility in membership and liability separation from other companies in the series. You should contact an accountant or legal professional to help you decide on the right business structure.
Let MyCompanyWorks take care of your business formation. Order online with just a few details, and we’ll start the process within one business day. Join tens of thousands of satisfied customers today.
Summary
We have only covered the top reasons why companies incorporate in Delaware, and these factors make the First State a serious contender when its comes to where you do business. Business registration is straightforward, affordable, and protects the identity of business owners.
Investors are more likely to fund Delaware LLCs and Corporations because the laws protect their investments. It’s easier to find funding when your physical or foreign-qualified business is in Delaware. There’s also a low corporate tax burden, which is ideal for profitability. Many companies from Delaware LLCs simply to attract investment funding, and it works!
The combination of a progressive business environment, favorable corporate laws, and the opportunity to form multiple companies under one parent business make Delaware an attractive option for startups. MyCompanyWorks has helped thousands of small businesses since 2001. With just a few clicks, you can order a startup package and we’ll do the rest. Most orders are processed within one business day and we make the process as fast and painless as possible. While you’re waiting you can find tons of small business resources on our blog. Discover new business ideas and expert help to run your company. No matter what you need, MyCompanyWorks is your one-stop-shop for everything to run a successful business.
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