The Benefits of Delaware and Nevada
Two of the Most Common States for Incorporation Businesses That Operate Nationally
Two of the most popular places to register businesses that operate nationally are Delaware and Nevada. What is it about these two states that make them so popular? Some of the benefits are identified below.
Delaware offers various advantages for certain types of business entities, including without limitation:
- Delaware has a business law and system of corporate governance that is considered to be one of the most flexible in the United States.
- The Delaware Court of Chancery focuses solely on business law and uses judges instead of juries.
- For corporations, there is no state corporate income tax for companies that are formed in Delaware but do not transact business there (but there is a franchise tax).
- Taxation requirements are often favorable to companies with complex capitalization structures and/or a large number of authorized shares of stock.
- There is no personal income tax for non-residents.
- Shareholders, directors and officers of a corporation or members or managers of an LLC do not need to be residents of Delaware.
- Stock shares owned by persons outside Delaware are not subject to Delaware taxes.
Nevada also has its own unique advantages for businesses:
- First, Nevada has no state corporate income tax and imposes no fees on corporate shares
- There is no personal income tax or any franchise tax for corporations or LLCs (but initial and annual statement fees and business license fees apply).
- For corporations, there is no state corporate income tax for companies that are formed in Delaware but do not transact business there (but there is a franchise tax).
- Shareholders, directors and officers of a corporation or members or managers of an LLC don’t need to be residents of Nevada.
For questions about the best state of incorporation for your business, or to determine if you need to foreign qualify in another state, please make sure to contact your tax professional or attorney. If you do not have one, we would be happy to connect you with one.