Nicknamed “The Diamond State,” Delaware is known in the startup community for its extremely business-friendly corporate laws. Its neighboring states know it as “the home of tax-free shopping,” and it’s got a thriving tourism industry – one of the most successful in the It’s also the second-smallest state in the country, with a total land area of 1,948 square miles, all of which are sparsely populated.
At this point, you’re probably thinking Delaware’s a perfect home for your startup. And you’re not entirely wrong – it’s one of the best places for small businesses in the US. At the same time, being an entrepreneur in Delaware isn’t without its challenges.
The greatest of these involves the very same laws that are beneficial. The fact that if you incorporate in the state but aren’t headquartered there, you’ll actually end up having to pay the annual franchise tax for two states – both Delaware and your actual home state. In short, unless you’re either physically located in Delaware or willing to relocate there, trying to take advantage of its business-friendly laws can actually put a pretty big dent in your budget.
While that may not mean much for a larger organization with plenty of shareholders (and with the capital to deal with a few extra taxes), that’s a pretty huge drawback for smaller businesses. Not only that, incorporating in Delaware means you’ll need to hire a registered agent who actually maintains a street address in the state. Finally, incorporating in two different places means you’ll also have to file required reports for both.
Still, even in the face of these drawbacks, Delaware is an awesome place for any startup, however great or small. If you’re willing to relocate – or already situated there – then by all means, make it the home of your business. You won’t regret it.
And if you need any help with the process, don’t worry. MyCompanyWorks has got you covered. Our comprehensive guide on starting a business in Delaware will teach you everything you need to know, from the conceptual stages straight through to annual operations.
We’ve taken great pains to make that guide a one-stop resource – the only one your business will ever need. And if you want a bit of extra help with getting your business on its feet, we can do that too. Contact us today to learn more!
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