Why Do So Many Companies Choose to Incorporate in Delaware?

What’s the deal with Delaware? For years companies have flocked to the state in order to incorporate, despite the fact that very few of those corporations are actually headquartered there. You may have heard that Delaware’s tax laws are particularly advantageous to big companies, but it doesn’t end there. Let’s take a look at the main reasons why so many corporations choose to incorporate in the First State.

1) Flexibility

When the time comes to structure your corporation, Delaware offers some of the most flexible corporate statutes. You’ll have plenty of leeway to design your company’s structure and board members. Your shareholders, directors, and officers are not required to live in Delaware, for instance, and you’ll only need one person to assume each role.

2) Tax Advantages

Many of Delaware’s tax laws are designed to drum up business. If you form a business there and conduct business in a separate state, you won’t need to pay Delaware’s state corporate income tax. Additionally, anyone who owns stock shares outside of Delaware won’t be required to pay the state’s taxes.

3) Privacy

If you’re concerned about privacy, Delaware’s laws may be of particular interest to you. Corporations in the state are not required to disclose the names of their officers or directors on the formation documents.

4) Attractive to Investors

More than any other state and business entity, Delaware corporations are preferred by angel investors, venture capitalists, and investment banks. When you incorporate in Delaware, you take on the image of a national company with serious commercial aspirations, which is important to investors and customers alike.

5) Established Court System

Delaware has a unique, well-established court system in the Court of Chancery. Because the Court specializes in corporate matters, its judges are knowledgeable in the complex field of corporate law. If your business should ever be involved in litigation, you can rest assured that your dispute will be handled by a judge who excels in corporate law.

6) Extensive Precedent

Because the state sees so many corporate cases, judges have considerable precedent to form the basis of their decisions. Your attorney can also look to the extensive corporate case law in Delaware to predict the outcome of a dispute and make strategic decisions.

7) Speed and Ease of Incorporation

As an added bonus, the Delaware Secretary of State Office offers expedited filings to process your incorporation more quickly than in any other state. In some cases, you can file to incorporate your company and have your files processed in under an hour.

While there are plenty of great reasons to incorporate in Delaware, the advantages tend to be reserved for larger companies. If you’re not sure whether incorporation is right for your company, contact the law firm of Bergstein Flynn. Our business attorneys will apply their extensive experience to the unique needs of your company.

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