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Is Delaware the cheapest place to incorporate?

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Re: Is Delaware the cheapest place to incorporate?

#51

Post by yieldcrv »

sertbdfgbnfgsd wrote: post #30
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…

> I personally find Wyoming to be better faster and cheaper than (...) I hear that some states (or all?) require you to have someone physically in the state (and naturally some companies offer this as a service, and charge). Is that right? or are there some states without this requirement?

this concept is called a registered agent, they service all states. the largest registered agents in the US service every single state in the union.

it is not complicated or presumptive of anything like the another reply suggested.

every state has many service providers that compete with the national ones.

Re: Is Delaware the cheapest place to incorporate?

#52

Post by glimshe »

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…

Would Nevada/Wyoming be a good deal if they lived in the US? Let's say, living in Texas.

Re: Is Delaware the cheapest place to incorporate?

#53

Post by toast0 »

glimshe wrote: post #52
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…

Would Nevada/Wyoming be a good deal if they lived in the US? Let's say, living in Texas.

If your corporation will be deemed to operate in the state you live in, which it might, then it'll need to register there as well as its home state. The least hassle path is often to make the corporate home the same as your home, then you don't have to register in two different states, and you don't need to pay a registered agent, because you can do that, etc.

It's certainly a different question if you're likely to get funding, but it's not hard for a skilled attorney to re-incorporate your business as a Delaware corp if that's a condition of financing, just takes a bit of time to do the work, and maybe not much more time than incorporating in Delaware to begin with, and delaying hassle that you might be able to avoid is better than paying it upfront.

Re: Is Delaware the cheapest place to incorporate?

#54

Post by terminous »

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?

Delaware Court of Chancery also holds the doctrine of shareholder supremacy, where execs actually have an obligation to maximize shareholder interests. Other states don't recognize it or allow balancing other stakeholder priorities.

Re: Is Delaware the cheapest place to incorporate?

#56

Post by KieranMac »

toast0 wrote: post #53
glimshe wrote: post #52

Earlier quoted context omitted.

Would Nevada/Wyoming be a good deal if they lived in the US? Let's say, living in Texas.

If your corporation will be deemed to operate in the state you live in, which it might, then it'll need to register there as well as its home state. The least hassle path is often to make the corporate home the same as your home, then you don't have to register in two different states, and you don't need to pay a registered agent, because you can do that, etc. It's certainly a different question if you're likely to g…

I agree with the first paragraph and strongly disagree with the second. If you are a US citizen and live in the US, for any pass-through entity, you will likely be taxed and need to register as a foreign entity in your home state. Probably easiest to just incorporate where you reside, unless you're looking to raise capital, in which case you should just go straight to DE.

Conversion costs and/or re-incorporation complexity varies considerably by state. Some states allow for simple statutory conversion; other states expressly prohibit it. It is not accurate to to say that reincorporating is just a bit of work. Sometimes it is, and sometimes it's a lot of work. If you're serious about raising capital, start as a DE C Corp from the gun. Especially if you have multiple founders.

Re: Is Delaware the cheapest place to incorporate?

#57

Post by KieranMac »

actionfromafar wrote: post #46
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?

Nope.

Re: Is Delaware the cheapest place to incorporate?

#59

Post by gamblor956 »

If you're in Taiwan, then Taiwan.

Incorporating in Delaware means that you'll be filing a U.S. tax return every year, the cost of which would likely exceed your business maintenance costs (if any, depends on the state). If you need to raise money, you can always incorporate a Delaware subsidiary (or parent) then.

I know that Delaware is a popular choice in the startup community, but that is because it is what VCs want. Delaware is very rarely the proper choice for the founders, it is generally not the right choice for small businesses (meaning fewer than 50 employees or $50 million in annual revenue), and it's almost never the right choice a small business that have no physical presence in the U.S.

Re: Is Delaware the cheapest place to incorporate?

#60

Post by jawns »

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?

I'm a longtime Delawarean and in my past life as a journalist I wrote about why the state is such a corporate haven.

The short answer is that companies incorporate in Delaware to mitigate risk.

The slightly longer answer is that the Delaware courts that deal with corporate legal matters are much more predictable than comparable states. There is voluminous settled case law, and so when you incorporate in Delaware, it is a safe option, a known quantity, relative to other states.

That's why VCs and other investors want the company to be incorporated in Delaware. It's not just because everybody else is doing it; it's to mitigate legal risk.

When we look at consumer products, we sometimes consider the total cost of ownership. Maybe a pair of sneakers is not the cheapest, but it lasts longer than a budget pair, so it has a lower cost of ownership over the lifetime of the product. Delaware might not be the cheapest state to incorporate in, but it has the legal equivalent of a low cost of ownership over the life of the business.

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