With more than half of all publicly traded companies incorporating in Delaware, you may be wondering why more and more businesses are choosing Delaware over any other state in the U.S. Besides the legal protection and convenience advantages in Delaware, here are five primary reasons why so many businesses incorporate in Delaware.
1. Delaware offers more privacy for owners - Corporations in Delaware do not need to disclose the officer or director names on formation documents. These names do not appear on public records so your company can maintain its privacy.
2. The Delaware Court System is well-versed in corporate issues - Delaware’s Court of Chancery uses judges, instead of juries, who are usually experts in complex corporate law issues. Corporate attorneys in the U.S. are usually already familiar with Delaware business laws so your company attorney may already know the laws of Delaware in comparison to other states.
3. Delaware does not have a minimum business bank balance account requirement - Many banks in the U.S. require a minimum opening balance in order to open a new bank account for your business.
4. Tax Advantages - Businesses that are formed in Delaware and do not conduct business there, are not subject to Delaware state income tax. Also, Directors are able to set any price on the stock they sell and stock shares owned by people outside of Delaware do not need to pay Delaware taxes.
5. Delaware corporations are more likely to be VC funded - Venture capitalists and investment banks usually prefer to back Delaware corporations. If you are looking for VC funding now or possibly in the future, it would be best to incorporate in Delaware now instead of having to convert your company later when investors request you to do so.
While all these benefits in regards to Delaware incorporation exist, where you choose to incorporate depends on many factors including the type of business you own, where you are headquartered, your business structure and more. Read out blog about Entity Formation Documents if you'd like to learn more about how to structure your business.
How you set up your business is a complicated decision that will have long-reaching impacts on your organization and its finances. Let Aprio Cloud analyze whether incorporating in Delaware is the best fit for your business. Let's talk about how we can help by scheduling a consultation today.
Are you thinking of expanding globally? Aprio Cloud also assists global companies set up companies in the US by filing paperwork, opening US bank accounts, & providing formation and tax advice. Read more in our comprehensive guide to expanding to the US.