What State Should I Incorporate In?
Laws and fees governing corporations can vary from state to state. While you are able to form a corporation in any state you choose, most of our customers choose to form their corporation in the state in which they are conducting business. This is typically the most simple and cost effective way to operate your business for the following reasons:
* Any state that you do business in will require you to file a "Foreign Qualification" if you are not incorporated there, costing additional fees and paperwork. (e.g. If you form a corporation in California, but wish to do business in Arizona, Arizona will require that you Foreign Qualify).
* If you form a corporation in one state and do business in another, you could subject your business to taxation in both states. Many states will tax a corporation that exists in their state, even if it is not doing business there.
Special Considerations for Delaware and Nevada:
There are certain circumstances that could make it beneficial to incorporate in a state other than your home state. If you intend to do business in several different states or if your home state has complex laws or high tax rates and filing fees, you may want to consider forming your business in another state. Delaware and Nevada are commonly recognized as states that are attractive to businesses.
Delaware is recognized as having modern and flexible corporate laws, a business friendly government, and a customer service oriented staff that can process documents and requests much quicker than other states.
Nevada does not charge a state corporate income tax or a personal income tax and allows for a higher level of privacy for a business and its owner's personal information.
Why do so many companies incorporate in Delaware?
As stated by the Delaware Office of the Secretary of State, Delaware General Corporation Law is one of the most advanced and flexible corporation statutes in the nation. In addition, Delaware courts have over 200 years of legal precedent as a maker of corporation law. Further, the state legislature seriously takes its role in keeping the corporation statute and other business laws current. Finally, the office of the Secretary of State operates much like a business rather than a government bureaucracy with its modern imaging system and customer-service oriented staff.
Do I have to live in Delaware?
Delaware law requires every corporation to have and maintain a registered agent in the State of Delaware. "My Corporation" can provide you with Registered Agent Services should you desire to incorporate in Delaware.
How quickly can I incorporate in Delaware?
The Division of Corporations in Delaware offers a variety of incorporation services including "2-Hour", "Same Day" and "24-hour" processing and filing of documents.
Franchise tax
All corporations incorporated in the State of Delaware are required to file an Annual Franchise Tax Report and to pay a franchise tax. Taxes and annual reports are to be received no later than March 1 each year. The minimum tax is $30 with a maximum of $150,000.
Franchise Tax Calculation
Authorized Shares Method:
• Less than 3,000 shares (minimum tax) $30.00
• 3,001 - 5,000 shares $50.00
• 5,001 - 10,000 shares $90.00
• each additional 10,000 shares or portion thereof $50.00
Delaware Corporation Annual Report
Annual reports are sent to the registered agents in December of each year. A $20.00 filing fee is required for the annual report. Annual reports or reprints may be requested through your registered agent.
The Nevada Incorporation Advantage
* No Nevada State Corporate Income Tax
* No Nevada Taxes on Corporate Shares
* No Nevada Franchise Tax
* No Nevada Personal Income Tax
* No I.R.S. Information Sharing Agreement
* Nominal Annual Fees
* Minimal Nevada Reporting and Disclosure Requirements
* Stockholders are not Public Record
* Stockholders, directors and officers need not live or hold meetings in Nevada, or even be U.S. Citizens.
* Directors need not be Stockholders
* Officers and directors of a Nevada corporation can be protected from personal liability for lawful acts of the corporation
* Nevada corporations may purchase, hold, sell or transfer shares of its own stock
* Nevada corporations may issue stock for capital, services, personal property, or real estate, including leases and options. The directors may determine the value of any of these transactions, and their decision is final.
**Further resources: mycorporation.com
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