Share

Woodland Hills Business Law Blog

Tuesday, December 17, 2013

Where to Incorporate Your Small Business

Should you incorporate your business in your home state? What about Delaware or Nevada, long known as havens for corporate entities? This decision should not be taken lightly because incorporating your business in a particular state will determine, to a significant extent, the laws that will apply to your business.

Often times, the best choice for corporate jurisdiction is the home state where your business is located.  There are several reasons for this. First, filing in a different state will not absolve you of the obligation to pay corporate taxes and comply with filing requirements in the state where your corporation has its operations. For example, if the corporation is located in California it will be subject to California fees and taxes, either as a domestic California Corporationor as a “foreign corporation” doing business in California. Additionally, if you are incorporated in a state other than where you are physically located, you will likely incur another set of filing fees and expenses for a registered agent who is physically located in the state of incorporation.

Many companies opt to incorporate in the State of Delaware, even though very few of them are actually based there. Approximately 60% of Fortune 500 companies are incorporated in Delaware. These major companies do so because Delaware’s corporate laws are generally favorable to business and management.  Delaware also has a special Court of Chancery that hears only business law cases. These courts afford companies a degree of consistency and predictability in rulings, which may or may not be found in other states.

Many entrepreneurs also consider the State of Nevada. Many companies are attracted to Nevada’s pro-business laws and favorable tax policy. Nevada also has a special business court, similar to Delaware’s Court of Chancery, although it is not as well established and lacks the breadth of case law that Delaware has.

If your company is engaged in risky or litigious business, then Delaware,Nevada or Wyoming may provide some additional liability protection.  For businesses that are essentially holding companies or otherwise lack operations as a traditional business would, forming a company in these states can also make a lot of sense since the business would not be subject to the laws of multiple states.
 


Blog Categories

Business Law

Real Estate

Archived Posts

2014
2013


The Law Offices of Joseph J. London assists individuals and businesses with Commercial and Residential Real Estate Transactions, Franchise Law, Business Transactions, Corporate/Partnership/LLC Transactions and Dispute Resolutions in the San Fernando Valley, CA including Woodland Hills, Tarzana, Canoga Park, West Hills, Winnetka, Topanga, Reseda, Encino, Northridge, San Fernando, Sherman Oaks, North Hollywood, and Van Nuys, as well as Los Angeles, Malibu, Santa Monica, Thousand Oaks, Burbank and Pasadena in Los Angeles County, Ventura County, Orange County, Riverside County and San Bernardino County.



© 2017 Law Offices of Joseph J. London
21031 Ventura Boulevard, Suite 605, Woodland Hills, CA 91364
| Phone: 818-346-2266

Real Estate Law | Business Law | Franchise Law | Corporate/Partnership/LLC Law

Attorney Website Design by
Amicus Creative