The importance of incorporating a business is indescribable. For business owners, the business registration offers numerous benefits in terms of legal protection, limited liability, and overall convenience.
Almost all states in the United States have a corporate-friendly environment, but one state which stands out among the rest is Delaware. When it comes to incorporating and starting a business, Delaware is the place to be. In fact, you may have seen plenty of companies that are not physically headquartered in Delaware incorporate within the state.
But why are business owners choosing Delaware for the incorporation of their company? Here are some of the reasons why Delaware is a great place for starting a business.
Delaware has flexible policies for the structure of a corporation. While many states require the board members and officers of a company to be the residents of the very state in which they are seeking incorporation, Delaware doesn’t have such rules. While other states allow the incorporation of only those companies that have at least three members to separately hold the positions of director and officer, Delaware allows just one person to fill in the role of a shareholder, officer, and director of a company.
The Delaware state allows corporations to file for incorporation without disclosing the identities of its directors or officers on the company documents. The names of the members and managers are specified in an operating agreement, which is private in nature. This provides a much-appreciated layer of privacy to business owners who don’t want the identities of their directors to be on public records.
3. Eye of Investors
As an owner of a business startup, you know the importance of acquiring venture capital (VC) funding. Venture capitalists and investment banks also have set rules when it comes to injecting their funds into a business. Many VCs and banks go with businesses that are incorporated in Delaware, So, if you are looking forward to securing VC funding, it is advisable to consider incorporating and starting your business in Delaware.
4. Legal Protection
Well-established courts in Delaware are highly respected. For corporate issues, the court uses judges instead of juries. These specialized and experienced judges know how to deal with complex corporate issues. Many corporate attorneys are also well-versed in Delaware corporate laws and your company attorney will be familiar with the law of the state, making it easier for you to deal with any type of litigation.
5. Tax Advantages
While Delaware is not the only state with tax advantages, it has some friendly business laws that are popular among all business owners. Businesses that are incorporated in Delaware but that don’t do business in the state are exempt from paying state corporate tax (though they are eligible for a franchise tax).
Wrapping It Up
While deciding the best place for incorporating your business lies on your shoulders, starting in Delaware has its advantages. You can choose whatever state you want to, depending on what’s right for your business, but we highly recommend you to have a look at the many benefits of starting a business in Delaware for a greater chance at future success.