Where Should I Incorporate my Business?
One of the first decisions a business must make after deciding to incorporate involves selecting the proper state of incorporation. A corporation is not required to incorporate in the state of its operations; however, often the best decision may be to incorporate in your home state.
Two issues must be weighed to determine the proper state: (1) a dollars and cents analysis comparing the costs of incorporating in the state of operation versus qualifying to do business as a foreign corporation in the state under consideration and (2) determining the advantages and disadvantages of each state's corporate laws and tax structure. The decision usually falls between the state in which the business is located or Delaware.
If the corporation is a closely held corporation and does business primarily within a single state, local incorporation is often preferable. The cost of local incorporation will usually be less than incorporating in another state and qualifying to do business as a foreign corporation in the state. A foreign corporation that qualifies to do business in another state is subject to taxes and annual report fees from both the state of incorporation and the qualifying state. Another disadvantage of incorporating outside of your home state is the possibility of having to defend a law suit in another state.
For advice regarding which state is optimal for your particular business situation, consult an attorney or an accountant.
During the life of your business, if you find that your company needs to foreign qualify to transact business in another state, BizFilings can assist with this process. To learn about BizFilings foreign qualification service, click here.
For more detailed information information on choosing where to incorporate, visit:
Which State to Choose
Learn About Delaware
Detailed Info on All 50 States
