Why incorporate in Delaware
More than 900,000 US-based and offshore companies had chosen Delaware as their corporate home. Over 60% of the Fortune 500 firms and more than 50% of the companies traded on the New York Stock Exchange and NASDAQ are Chartered as Delaware Corporations
Delaware, the advice from the experts
Watch the first minutes of the Stanford University advice for incorporating a business. Kirsty Nathoo, CFO at Y Combinator, and Carolynn Levy, General Counsel at Y Combinator talk about the topic.
Delaware is a great place for a startup to incorporate
For a new company looking to attract outside investment from angels, venture capitalists and private equity, incorporating in Delaware is often the best way to go. Many investors will only invest in a Delaware C corporation, so starting off with a Delaware corporation from the beginning can save a lot of legal and accounting headaches later. Delaware’s laws regarding securities and management fit in with the expectations of professional investors. Even if you launch your startup as an LLC in Delaware, you can easily convert your LLC to a C corp with one state filing and one IRS filing.
Delaware’s corporate legal system strives to provide a corporate legal climate conducive to the growth and profitability of the over 850,000 companies chartered as Delaware corporations.
Delaware’s Court of Chancery is an equity court of limited jurisdiction which exists solely to adjudicate corporate litigation. For more than 200 years the Chancery Court has been deciding corporate disputes involving many of the largest corporations in the world, and has developed a fully established corpus of case law and legal precedent which are cited by business scholars and attorneys all over the country and around the world. Delaware’s Court of Chancery is one of the most important corporate law courts, second only to the Supreme Court of the United States in its impact on corporate law. In addition to the influential role the Delaware Court of Chancery plays in shaping the corporate legal landscape, Delaware’s corporate laws are regularly reviewed, revised and simplified by the Delaware State Bar Association and the Delaware Legislature. Known as “The First State” for its role as the first state to ratify the U.S. Constitution, Delaware remains on the vanguard of legal innovation being among the first states to adopt legislation allowing for the creation of Limited Liability Companies (LLCs) and Series LLCs and the convenience of electronic signatures.
Delaware Companies are the Gold Standard
All around the US, corporate attorneys are well-versed in Delaware law, so if your company needs to obtain a legal opinion or other documentation you will have an advantage. Delaware earns one third of its state budget from the incorporation business, including filing fees, annual fees and taxes and the related legal work. You can be assured that the state has an interest in keeping its laws up to date, relevant to today’s needs and making sure that all the players in the ecosystem have high integrity.
Delaware is widely regarded by international entrepreneurs and investors as a favorable tax climate
There is no sales tax in Delaware. There is no state corporate income tax in Delaware on goods or services provided by Delaware corporations operating outside of Delaware. There is no state corporate tax on interest or other investment income in Delaware, when earned by a Delaware Holding Company. Delaware has no personal property tax. There are no State real property taxes, and the local real property taxes are very low. Delaware has no ad-valorem or value-added taxes (VATs). Delaware has no taxes on business transactions (TBTs). Delaware has no use tax, inventory or unitary tax. There is no State of Delaware inheritance tax on stock of Delaware corporations operating outside of Delaware held by non-residents of Delaware. There are no Delaware capital shares or stock transfer taxes. Delaware does not tax income from intangible property.