By Cassie Hightman
cassie@jayaramlaw.com
More than 65% of businesses choose to form their corporation or limited liability company in the state of Delaware, and the state’s popularity only continues to grow. So you may ask yourself, why incorporate in Delaware?
The State of Delaware has many incorporation advantages. For starters, Delaware is known as a tax haven. There is no state income tax for Delaware corporations that conduct business out of state, no tax royalty payments, and non-residents pay no personal income tax. In addition to being known as a tax-friendly state, corporate attorneys as well as investors are generally more familiar with Delaware corporate law, and as such, venture capital firms typically prefer (and often require) startups to be formed in Delaware.
While the above named advantages may have already convinced you, we cannot overlook the two main reasons to incorporate in Delaware:
(1) Delaware has the most pro-business laws of any US state. The Delaware General Corporation Law not only offers predictability and stability, but it provides businesses with the flexibility necessary to carry out their business needs. Further, due to its laws, Delaware provides a “thick” corporate veil, thereby protecting an individual’s personal assets from their business’s liability.
(2) Delaware has a specialized judicial system with specific jurisdiction over corporate disputes, known as the Delaware Court of Chancery. With no jury, the nation’s preeminent business court consists of five judges who use business-friendly Delaware law to efficiently resolve disputes.
Given the various incorporation benefits, it is no wonder that over one million businesses are incorporated in the state of Delaware.