By Dana Livne
When our clients decide to launch a business, they often ask us about the incorporation process. Business owners incorporate their business primarily to limit their personal liability for business debts and obligations. Choosing where to incorporate is an important decision, because the state your company calls home will continue to influence a number of aspects of your company’s lifecycle.
Over 50 percent of the United States’ companies choose to incorporate in Delaware, even if they do not have employees, offices, or clients based in the state.
Whatever your company’s plans for the future may be, there are great reasons to incorporate in Delaware alongside some of the largest and most successful U.S. companies, like Coca-Cola and Apple. Here are three reasons:
- State law. Delaware’s corporate laws provide much flexibility in the organization of a corporation, often more than other states’ corporate statutes do. For example, in Delaware, the same individual may act as the sole shareholder, director and officer. Although some states have duplicated Delaware’s corporate statutes, Delaware’s substantial body of corporate case law provides companies with more certainty when trying to interpret the applicability of corporate law or when seeking a judicial resolution of a business law dispute.
- The courts. Courts in Delaware understand the complexities of corporate law, for which the state maintains a dedicated court: The Delaware Court of Chancery. As businesses that find themselves in court know, the speed at which litigation progresses can have a real impact on the liquidity of the business, as well as other substantial impacts on the health of the company. Being incorporated in Delaware means that if a dispute should arise you will be able to, in most cases, avail yourself of the state’s swift and excellent courts.
- Taxes. Companies incorporated in Delaware can owe substantially less in taxes, as the state’s tax code has a number of features that make it more attractive to businesses.
At PilieroMazza, our attorneys are very experienced in helping to establish a variety of businesses. The first step to the incorporation of your company will involve choosing the entity type. For example, would company objectives be best served as a limited liability company or as a corporation? To register in Delaware, a registered agent located in Delaware will need to be nominated. This agent will be either a resident or business entity that is authorized to do business in Delaware.
About the Author: Dana Livne is an associate with PilieroMazza in the Business and Corporate Group. She may be reached at firstname.lastname@example.org.