Choosing a State of Business Formation

Once you have decided to form a legal entity, you must choose the state in which you will be incorporating or forming your LLC within. Generally, if you have a small business and are going to be conducting a substantial amount of your business in your home state, the general norm is to incorporate in your home state.

Please review the information below as which state is the right choice for your new business venture.

Tips for Choosing The Best State to Incorporate

Most people choose Delaware, Nevada or their home state.  Starting a business in Delaware is often chosen, especially by larger companies, because it has the most developed and flexible corporate statutes in the country and is considered pro-business.

Starting a business in Nevada has also become popular because of its lack of state corporate income tax, franchise tax, and personal income tax.  It also has relatively low fees.

California and Texas are also popular options for starting a business and CorpNet has a large customer base in these states.

Nevertheless, if you have a small business and are going to be conducting a substantial amount of your business in your home state, it will likely be beneficial to incorporate in that state.  If you incorporate out-of-state but do much of your business in your home state, you may have to make a filing to “qualify to do business” in the state if there is a substantial ongoing business or physical presence in the state.  You may then be subject to the same fees, taxes, and regulations as if you had incorporated there in the first place, and you will have paid filing fees (and, perhaps franchise taxes) to more than one state.

Read the Guide to Incorporating for more information on making the decision that is right for your business and situation.

If you are ready to being incorporation of your business, you can locate your state and learn more about these options in our Where to Incorporate page.

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