Which State is Right for You? Where to Incorporate Your Business

Does it really matter where you incorporate your business? Absolutely! You have heard the real estate term (location, location, location) and to some extent the same applies to incorporating your business. Different states have different laws that affect corporations -- some, like Delaware and Nevada -- have well established reputations for being pro-business. Depending on your situation it pays to do your homework when it comes to determining the best place to incorporate. 

Here are the major choices to consider when selecting where to incorporate your business:

Local

The majority of small business owners simply incorporate in the state where they are physically located. It's quick, convenient and may work fine for those small companies that conduct business in one state.

Popular states for foreign corporations

• Delaware

Delaware is considered pro-business and is well-known as the state of choice for companies that want to "go public."  Benefits include a zero percent state corporate income tax for companies that operate outside Delaware, a special court system established solely for business disputes and very low incorporation fees.

• Nevada

Nevada is rapidly gaining a reputation as a business-friendly state thanks to nearly complete anonymity and highly favorable tax treatment, including zero percent state tax on corporate profits, zero percent annual franchise state tax and zero percent state tax on personal income.

Laws on this topic may vary from state to state. This content is not meant to provide you with complete information and it is not intended to be legal or tax advice. It is recommended that you consult with your own attorney, accountant or other advisor regarding your specific situation.