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Incorporate In Delaware - Pros and Cons

There is a very simple reason why so many companies incorporate in Delaware. Three states top the list as being the most accommodating for the filing of incorporation documents to form a company. They are Delaware, Florida and Nevada. But even among these three, Delaware wins out as being the least expensive and most supportive host.

Because incorporation is in itself a daunting task, many people don't even stop to consider if their state of residency is the best location for their company's legal home. And that's unfortunate. You do not have to incorporate your business in the state where you live. Shopping for the best place to incorporate is just as practical as comparison shopping for any other service.

Delaware's biggest draw is its highly regarded Chancery Court. Because the court is known for thoughtful, forward-thinking decisions on corporate issues, its rulings are studied in law schools, making Delaware corporate law familiar to the vast majority of business attorneys.

In brief, Delaware's incorporation laws are clear and carefully planned. An out-of-state lawyer is more likely to be familiar with Delaware corporate law, rather than the law in any other state that is not that attorney's home state.

Here are the top reasons for choosing to incorporate in Delaware:

  • Delaware's extensive body of corporate law makes it easy to know exactly how to structure a company to protect assets and ward off lawsuits.


  • Incorporations are a large revenue stream for Delaware, so the state invests in the technology needed to make things run smoothly.


  • Fees for incorporation are low. And there is no minimum balance requirement to open a business bank account.


  • One individual can act as all officers for a Delaware corporation. In addition, privacy, and even anonymity is available for company directors, officers and shareholders.


  • If a company incorporates in Delaware, but does not do business there, Delaware does not require that the company pay state income tax.


  • The Delaware inheritance tax is not applied to stock held by non-residents.


  • If a director sells personal shares of stock, he or she can set the price without consultation.


  • Shareholder meetings can be replaced with written communications.


  • Board members do not need to be shareholders.


  • The company records do not have to be kept in Delaware.


    • Services exist that will allow you to incorporate in Delaware by mail, by phone or online, and the entire process can be completed without a single visit to the state. With all of these options available, it's no wonder that incorporation in Delaware is no longer just for the "big guys."


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