Incorporate in Delaware for Success

By Brett Melson Monday, May 4, 2015

why incorporate in delawareAmericans love small businesses. According to a recent survey by the PEW Foundation, 71% of us hold a better opinion of small businesses than any other institutions, including religious organizations.   

As Delaware formation specialists, we often point out the many benefits of utilizing a Delaware corporation. Business startups need to be aware of ways to ensure their ventures are successful, so a recent article describing a new National Bureau of Economic Research working paper from researchers at the prestigious Massachusetts Institute of Technoloy caught our attention.

The researchers found that the odds of success for a Delaware corporation with intellectual property compared to a Massachusetts LLC without intellectual property are 3,097:1.

The authors of this working paper have created a way to predict the growth of a new business. Although it would seem like a very complicated task to find data to predict success, they were able to identify a few surprisingly simple concepts:

  • Merely registering a company in the business-friendly state of Delaware is indicative of a 40% greater chance of success
  • The company name makes a difference. Keeping the name short, three words or less, is associated with success. Companies named after the founder have only a 5% rate of success compared to companies not named for the founder.
  • An early mention in a newspaper, in this case The Boston Globe business section, gives a business a 30% better chance at success
  • There is a 60-times greater chance for success if a business files for a patent within a year of start-up
  • Companies registering as a corporation as opposed to an LLC have a 5 times greater success rate

In addition to these factors, the research predictably indicated that the timing of a start-up has a significant impact on success. Entrepreneurs who were able to start during a growth market had an easier time, since they benefitted from the boom.

There is a large amount of research indicating the advantages of incorporating both small and large businesses in Delaware. Perhaps that is why more companies are incorporating in Delaware than any other state, including half of all U.S. publicly-traded companies and 60% of Fortune 500 companies.

For assistance with the formation of your next Delaware Corporation, please call Harvard Business Services, Inc. at 800-345-2677 Ext 6131 or visit  

Work Cited:


*Disclaimer*: Harvard Business Services, Inc. is neither a law firm nor an accounting firm and, even in cases where the author is an attorney, or a tax professional, nothing in this article constitutes legal or tax advice. This article provides general commentary on, and analysis of, the subject addressed. We strongly advise that you consult an attorney or tax professional to receive legal or tax guidance tailored to your specific circumstances. Any action taken or not taken based on this article is at your own risk. If an article cites or provides a link to third-party sources or websites, Harvard Business Services, Inc. is not responsible for and makes no representations regarding such source’s content or accuracy. Opinions expressed in this article do not necessarily reflect those of Harvard Business Services, Inc.

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