Where should I incorporate my business?

September 19, 2013

Delaware is one of the most popular places to incorporate, but there are a number of factors business owners should consider when deciding which jurisdiction will be the legal home of their company.

Below, we'll go over some of the reasons why more than 1 million entities—including 50 percent of all publicly traded U.S. companies and more than 60 percent of Fortune 500 firms—have chosen to incorporate in the First State.

Delaware charges a low, fixed annual fee

LLCs incorporated in Delaware must pay a flat fee of $250 per year. Many other states charge a variable fee based on factors such as the size of the company's staff, the amount of revenue it generates or the number of shares it has issued. Also, relative to many other states, Delaware's annual fee for LLCs formed there is fairly low.

Mandatory disclosures are limited in Delaware

States vary widely in terms of the reporting requirements they impose on domestic corporations. For example, many states require that the names of all corporate officers, directors or members be listed on annual reports. Delaware does not have such a rule, they require just one name to be recorded on the annual report each year, which makes it a sound choice for the incorporation of entities in which stakeholders wish to maintain a high level of privacy.

Incorporation can be completed fast

Not all states are equal when it comes to the speed with which the incorporation process can be completed. In most jurisdictions, pertinent documents can be processed and return to the filer within a week or slightly longer. In Delaware, the state Division of Corporations places a high priority on customer service and can typically complete an incorporation filing within a matter of hours.

This difference may not seem like a major concern to many entrepreneurs who have worked to build their companies over months or years, but there are numerous situations in which time may be of the essence. For example, an organization may be faced with potential legal complications or have a need to complete a time-sensitive transaction involving real estate or other assets. In such cases, working with an experienced incorporation services company in Delaware may be the best way for a business owner to ensure that he or she is able to meet their needs.