Top Reasons So Many Companies Incorporate in Delaware
According to the Delaware Division of Corporations, over a half a million businesses have a legal home in Delaware, a number that includes over 50 percent of U.S. publicly traded companies and 58 percent of Fortune 500 companies. There must be a reason so many companies choose to incorporate in the same state. Following are a number of reasons Delaware is so attractive to corporations.
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According to the Delaware Division of Corporations, over a half a million businesses have a legal home in Delaware, a number that includes over 50 percent of U.S. publicly traded companies and 58 percent of Fortune 500 companies. There must be a reason so many companies choose to incorporate in the same state. Following are a number of reasons Delaware is so attractive to corporations.
- Taxes
Delaware boasts no sales tax or property tax for corporations. In addition, there is no corporate income tax if the company does not conduct business in Delaware, which it is not required to do. There is also no tax on shares of stock for non-Delaware residents.
- Legal system
The Delaware legal system has a great deal of experience with corporate laws, meaning those laws have been tested in the courts. Also, the state courts have a history of making decisions in favor of corporations. The legal system for courts is under the Court of Chancery, which is a separate court system devoted entirely to business.
- Out-of-state operations
A corporation formed in Delaware does not have to conduct business in the state, as mentioned. The company also can have a non-Delaware business address, as long as it has a registered agent in Delaware to deal with the state. Furthermore, no corporate records are required to be kept in the state.
- One-person incorporating
One person is all it takes to form a corporation in Delaware. In contrast to other states that may require at least 3 people to serve as officers for a corporation, in Delaware, one person can be president, treasurer, secretary, and director.
- Low costs
In addition to the previously mentioned tax benefits, there is a low annual franchise tax for corporations in Delaware, as low as $60 per year. There is also no minimum capital required to start a corporation in Delaware, as opposed to a $500 or $1,000 minimum in other states.
- One corporation, multiple types of business
If incorporation papers are filed with the broadest allowances, one corporation in Delaware can conduct any legal form of business. There is no need to file any additional paperwork for a corporation to conduct a different kind of business, which gives corporations a lot of leeway.
Source: Delaware Division of Corporations (https://delaware.gov/), which provides both information on incorporating in Delaware and resources for businesses in the state.
