Should you Incorporate in your own state or Nevada or Delaware?
Many have a question of where should their corporation be domiciled? Should it be in the state where the main office is located or would it be better to be incorporated in another state? Many corporations, including some of the largest corporations in America prefer to be incorporated in Nevada or Delaware for specific reasons. Both of those states offer certain advantages that no other states offer. The information below is to outline some of these advantages.
Why incorporate in Nevada?
Nevada offers many advantages as a corporate haven:
Nevada has no state corporate taxes.
Nevada has no franchise tax.
Nevada has no tax on corporate shares.
Nevada has no personal income tax.
Nevada provides total privacy of shareholders.
Nevada is the only state without a formal information-sharing agreement with the IRS.
Nevada is the only state that allows for the issuance of "bearer shares."
Nevada has minimal reporting and disclosure requirements.
Nevada has nominal annual fees.
Nevada allows for a one-man corporation.
Nevada has established case law that prevents easy piercing of the corporate veil.
Corporate officers and directors can be protected from any personal liability for their lawful acts on behalf of the corporation.
Stockholders, directors and officers need not live or hold meetings in Nevada, or even be U.S. citizens.
Only the names of the officers and directors are on public records. No other information, listings, or minutes of meetings are filed with the State.
There is no minimum initial capital requirement to incorporate.
Nevada corporations may issue stock for capital, services, personal property, or real estate. The directors alone may determine the value of any such transactions, and their decision is final.
Why Incorporate in Delaware?
Many international companies choose Delaware because of its corporation law structure, its stability, and its reputations. Below are a few of the reasons why corporations, large and small, foreign and domestic, choose Delaware for their corporate headquarters even though few, if any, have any sales or manufacturing or office facilities located in the state.
You can be all the officers of a Delaware corporation yourself. The same person can be president, vice-president, secretary, treasurer and sole director. Many states require at least three officers and/or directors.
Delaware is the least costly state in which to form a corporation.
No minimum amount of money is required to be in the company bank account when forming a corporation while many states require $1,000.
You can incorporate anonymously in Delaware and the corporations may be operated anonymously, never revealing the owner's identity to the State of Delaware.
The annual franchise tax on corporations compares very favorably with other states (as little as $50/year in most cases).
There is no Delaware sales tax, no property tax or state corporate income tax for corporations that are formed in Delaware and do not transact business in the state.
There is no state inheritance tax on stock held by non-residents of Delaware. These shares are taxed only in the state of residence of the corporation's owners.
There is no state income tax for Delaware corporations who do not operate within the state.
There is an established body of laws which protect the corporations in Delaware. Delaware is the only state to have a continuous Court of Chancery a separate business court system. This is meaningful to entrepreneurs for two reasons. First, there is a long-established body of laws relevant to corporations that has been tested in the Delaware courts over many years. In the event of any legal action, therefore, there is a high degree of predictability. Second, Delaware has a long record of pro-management decisions.
Directors may fix any price on shares of stock that they wish to sell.
Shares of stock owned by a person outside the state are not subject to any Delaware taxes.
One can form a corporation without ever visiting the state. You can form a Delaware corporation easily by mail or by phone through firms established for that purpose.
Annual meetings need not be conducted in Delaware. Meetings can be held anywhere, at the option of the director(s).
The same corporation may conduct different kinds of businesses. If the corporate documents filed with Delaware have the broadest type "purpose clause", any legal business activity of any kind may be conducted. The same corporation can conduct more than one type of business without any changes in the documents filed with the state.
Delaware corporations have a special "Director Shield" that permits corporations to shelter their directors from personal liability in connection with their actions as board members. Delaware statutes also help limit hostile or abusive takeover tactics.
Stockholders, directors, or committee members may act by unanimous consent in lieu of formal meetings.
The by-laws of a Delaware corporation may be formulated or altered at any time by its directors.
A Delaware corporation is permitted to pay dividends out of profits as well as out of surplus.
Delaware corporation stock can be privately owned or publicly traded on any stock exchange anywhere in the world when properly registered.
The corporate headquarters and the records of a Delaware corporation may be located in any state in America or in any country in the world as long as the corporation maintains a registered agent to represent you in Delaware. Most of the owners of Delaware corporations have never set foot in Delaware. A Delaware corporation does do not need to maintain a Delaware business address except for its registered agent address which is required by law for service of process in case of legal action against your company.