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Is Delaware the cheapest place to incorporate?

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Re: Is Delaware the cheapest place to incorporate?

#41

Post by KieranMac »

blovescoffee wrote: post #39
KieranMac wrote: post #38

I'm an attorney. Delaware is definitely not the cheapest or even in contention for the cheapest. Still, if you want to raise capital, the correct answer is DE C Corp. If you're not looking for external funding, any state will do. If you care about anonymity, do Nevada or Wyoming. If you don't care about anonymity, Colorado is actually a very good choice. Very simple, intuitive online filing system that accepts filing…

Why is the correct answer a DE C Corp if you're looking to raise?

It's just industry standard for capital raises. All corporate attorneys learn DE law when they go to law school and are expected to know it if they practice corporate law. A Colorado attorney doesn't know California law and a California attorney doesn't know New York law, but if they do corporate legal work, they're all expected to know how to deal with DE law.

Nobody knows Nevada or Wyoming law. I don't even think Wyoming attorneys know Wyoming law.

DE's court of chancery is also very sophisticated with respect to corporate legal issues. That makes it the venue of choice for investors, which means it has become the venue of choice for those seeking investment.

But in terms of states and their processes for filings, DE is a total pain in the butt. You have to pay an expedited filing fee just so that they can process your filing in less than a week. Their system is counterintuitive and clunky. You better like elevator music if you ever want to talk to a human. Sometimes they reject filings and just don't bother to tell you. It's all opaque and antiquated.

Re: Is Delaware the cheapest place to incorporate?

#42

Post by garrickvanburen »

blovescoffee wrote: post #39
KieranMac wrote: post #38

I'm an attorney. Delaware is definitely not the cheapest or even in contention for the cheapest. Still, if you want to raise capital, the correct answer is DE C Corp. If you're not looking for external funding, any state will do. If you care about anonymity, do Nevada or Wyoming. If you don't care about anonymity, Colorado is actually a very good choice. Very simple, intuitive online filing system that accepts filing…

Why is the correct answer a DE C Corp if you're looking to raise?

many VC's require it, cuz it keeps their admin standardized.

Re: Is Delaware the cheapest place to incorporate?

#43

Post by [deleted] »

blovescoffee wrote: post #39
KieranMac wrote: post #38

I'm an attorney. Delaware is definitely not the cheapest or even in contention for the cheapest. Still, if you want to raise capital, the correct answer is DE C Corp. If you're not looking for external funding, any state will do. If you care about anonymity, do Nevada or Wyoming. If you don't care about anonymity, Colorado is actually a very good choice. Very simple, intuitive online filing system that accepts filing…

Why is the correct answer a DE C Corp if you're looking to raise?

[deleted]

Re: Is Delaware the cheapest place to incorporate?

#44

Post by necubi »

blovescoffee wrote: post #39
KieranMac wrote: post #38

I'm an attorney. Delaware is definitely not the cheapest or even in contention for the cheapest. Still, if you want to raise capital, the correct answer is DE C Corp. If you're not looking for external funding, any state will do. If you care about anonymity, do Nevada or Wyoming. If you don't care about anonymity, Colorado is actually a very good choice. Very simple, intuitive online filing system that accepts filing…

Why is the correct answer a DE C Corp if you're looking to raise?

Not an attorney, but as someone with a startup incorporated in DE—it's just the default. Delaware has very good and well-understood corporate law and a judicial system that is able to handle complex corporate cases.

If you're fundraising as a Delaware C Corp you will face no questions about that, but if you've done something else you will need to explain why to your potential investors (and they will probably push you to reincorporate).

Re: Is Delaware the cheapest place to incorporate?

#45

Post by brudgers »

giantg2 wrote: post #16
brudgers wrote: post #11

Earlier quoted context omitted.

Finding customers is the best thing. The only good reason for a Delaware C Corp is because an investor requires it…in other words, the only good reason is because someone else is willing to pay for it. But yes, an LLC can be a reasonable option, but a sole proprietorship is the simplest thing that might work. And it requires no work beyond business records and tax reporting…and then only if you are making revenue. Un…

I wouldn't want to find a customer without a liability veil in place. At least in my state, an LLC is maybe $150 to set up and $70 every ten years. The paperwork is really 1 notarized form plus your bylaws (templates are available) and a report every 10 years. That's a small price for liability protection. If you make it generic enough, you can reuse it for future business ideas too.

I wouldn't want to find a customer

An LLC won’t protect you when you work with customers you can’t trust.

An LLC won’t make finding good customers any easier either.

And it won’t save you any legal fees if you get sued or make collecting what you are due when someone doesn’t pay any more likely.

But sure an LLC is easier than finding customers and then you can set up bank accounts and design a website and avoid the hard problem with those too.

Re: Is Delaware the cheapest place to incorporate?

#46

Post by actionfromafar »

KieranMac wrote: post #38

I'm an attorney. Delaware is definitely not the cheapest or even in contention for the cheapest. Still, if you want to raise capital, the correct answer is DE C Corp. If you're not looking for external funding, any state will do. If you care about anonymity, do Nevada or Wyoming. If you don't care about anonymity, Colorado is actually a very good choice. Very simple, intuitive online filing system that accepts filing…

Are you my attorney?

Re: Is Delaware the cheapest place to incorporate?

#48

Post by throwaway20222 »

KieranMac wrote: post #41
blovescoffee wrote: post #39

Earlier quoted context omitted.

Why is the correct answer a DE C Corp if you're looking to raise?

It's just industry standard for capital raises. All corporate attorneys learn DE law when they go to law school and are expected to know it if they practice corporate law. A Colorado attorney doesn't know California law and a California attorney doesn't know New York law, but if they do corporate legal work, they're all expected to know how to deal with DE law. Nobody knows Nevada or Wyoming law. I don't even think W…

I would also add from a founders standpoint - the infrastructure Delaware has supporting their business incorporations division has been miles above any other state I have worked with. They pick up the phone when you call! The files and forms are (relatively) easy to find. Supporting firms like registration agents are plentiful and straightforward for Delaware.

Re: Is Delaware the cheapest place to incorporate?

#49

Post by gumballindie »

Beijinger wrote: post #40
gumballindie wrote: post #36

Earlier quoted context omitted.

The issue is with paying high taxes and getting services of a quality comparable to hu, bg and so on. Things are really that bad in the UK (albeit more friendly and relaxed). You can indeed create a company in a few clicks, but the system has so many small issues here and there that it becomes frustrating real fast. Post brexit uk is seriously under skilled (the media calls it under staffed, but we all know whats rea…

Well, in HU and BG you pay around 10% company taxes. HU has low income taxes too but for a big salary, social security, retirement payments etc. is also pretty high. "but the system has so many small issues here" You can always abandon a company. Especially as a foreigner and online? Forget about it. I have no experience with the HMRC and I am sure every British person hopes for a better service. But please keep in m…

So that proves my initial point - taxes are lower in hu and bg. Shame they dont do online company registration.

Life expectancy likely _was_ higher in the uk than the us but given that the nhs is in shambles i’d be surprised if it isnt dropping.

To digress, the nhs is in such a bad state that guaranteed east europe will overtake the uk in terms of health care unless anything changes. The tax money is being wasted by the government either on inefficiencies or corruption. And now they cant blame europeans anymore.

Re: Is Delaware the cheapest place to incorporate?

#50

Post by yieldcrv »

bluGill wrote: post #35
yieldcrv wrote: post #21

almost nobody needs Delaware the reality is that there are 49 other states, half a dozen territories, and hundreds of semi-autonomous reservations a handful of which are also known to have their incorporation statutes they haven't all stayed still over the past 30 years while Delaware’s marketing engine keeps going, they compete directly anybody with reading comprehension can find one more favorable and cheaper than…

You are not wrong, but not necessarily right either. Delaware is used so commonly for this that they have a lot more details worked out where you may need a court trial for something weird. If anything goes wrong a lot more lawyers will know how Delaware laws work. There will be a lot more services that can do little things for you. You will find accountants who know Delaware rules (if you live in a state you will fi…

As my post says, some other jurisdictions have chancery courts just like Delaware, which means getting quick access to a business only court, and quick generation of case law.

But I think you - and most others that repeat that cookie cutter advice - are still missing the opportunity. Being able to get a competent court trial for something weird is absolutely valuable, but if you don't like the case law in Delaware you can literally argue for the opposite result in another state. Calculate the risk (and be good at math)

To me, that's a really fine reason to not use Delaware, for a fresh slate. You can shape the world, or craft a slice of it that suits you.

I agree with you that there are less service providers in other states. And they don't get as much action and have less reason to be competent too. My primary point still stands, most people don't need Delaware, most people never need those other service providers, never need a state court. If they ever get big and complex they're still most likely going to be in federal jurisdiction anyway - or have the option of moving a case to federal jurisdiction. Random entrepreneurs and placeholder company creators need a registered agent and that's it.

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