Have you ever wondered why so many companies incorporate in the State of Delaware? Delaware has established a reputation around the world as the best and most business-friendly state in which to incorporate.
More than 65 percent of all Fortune 500 companies and more than half of all U.S. publicly-traded companies are incorporated in the state of Delaware, and more startups are incorporating in Delaware every day.
One of the main Delaware benefits is the legal and liability protection of established corporate laws. These protections are simply incomparable to what is offered by any other state in the nation, which makes it the Incorporation Capital of the World.
The Delaware Court of Chancery is the oldest business court in America, uses judges instead of juries (which speeds up legal proceedings considerably) and maintains the most advanced and up-to-date case law, which corporate lawyers in Delaware rely on and refer to. This means that Delaware LLCs and corporations owners/shareholders will have decreased liability and litigation.
Another reason why companies incorporate in Delaware is the incomparable tax savings. There is no state income tax for Delaware corporations that conduct business out of state; no inheritance tax on stock held by non-Delaware residents; no state sales tax on intangible personal property (such as royalty payments); and shares of stock owned by non-resident aliens are not subject to Delaware taxes.
In addition, Delaware corporations not operating in the state of Delaware do not need to acquire a business license in Delaware.
The fact that Delaware ranks number one overall as the most corporate-friendly state proves, once again, that no other state in America has a corporate court system as powerful, as experienced, or as respected as Delaware's Court of Chancery.
The privacy afforded to owners of Delaware corporations and LLCs is also incomparable. The State of Delaware allows you to file your company without listing the names of the owners, which protects the owners' identities, personal information and privacy in general.
Owners of Delaware LLCs are not required to make the names and addresses of the LLC's members and/or managers a matter of public record. There are only two circumstances in which a Delaware Registered Agent would be compelled to reveal this information: in the event of a legal proceeding or at the request of law enforcement.
The state of Delaware is also very flexible in a variety of ways that benefit the owners of Delaware companies. Why else do companies incorporate in Delaware?
Looking for more reasons to consider a Delaware company over one formed in your home state? Read this article about what kind of company benefits most from choosing Delaware.Form a Delaware Company Now
Have you ever wondered why so many companies incorporate in Delaware, and why you should think about doing so as well?
In this video, our founder and CEO, Rick Bell, tells you some of the benefits of incorporating in Delaware and how Delaware's Court of Chancery is different from courts in other states. With the Delaware Court of Chancery being run by judges, having the most complete body of case laws, and how anyone can form a Delaware LLC or corporation, regardless of where a company does business, there are plenty of reasons why companies incorproate in Delaware.
The HBS Blog offers insight on Delaware corporations and LLCs as well as information about entrepreneurship, startups and general business topics.
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