Have you ever wondered why so many companies incorporate Delaware? Delaware has established a reputation around the world as the best and most business-friendly state in which to incorporate. Delaware's corporation laws and statues are used to model business laws in other states.
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.
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. With experienced judges who specialize in corporate law cases, Delaware companies can expect faster and more informed decisions on legal matters surrounding their businesses. With more predictable results Delaware LLCs and corporations owners/shareholders will have decreased liability and litigation.
- For companies operating outside of Delaware, there isn't any state income tax. This can save a lot of money for companies that are incorporated in Delaware, but not conducting business within its borders.
- There isn't an inheritance tax on stock held by non-Delaware residents. This means that if the owner of a Delaware company passes away, inherited stock won't be taxed if the owner lives outside of the Delaware.
- Delaware does not have a 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.
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 incorporate 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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