Delaware is famed to be the “incorporation capital” of America – more than 60% of Fortune 500 companies are incorporated in Delaware. According to Delaware Department of State, Division of Corporation’s 2006 Annual Report the number of active business entities in Delaware has grown 50% in the last six years to a total of more than 765,000. In 2006, Delaware welcomed more than 145,000 new businesses.
The reason why so many Fortune 500 companies are drawn to this state is the fact that Delaware has an excellent body of corporate case law spanning 110 years regarding such matters as management/shareholder issues and mergers/acquisitions.
Here are some facts dealing with forming a company in Delaware:
With all those advantages in place, Delaware might not be the most suitable place to incorporate your new business. Delaware is one of the three states commonly recognized as “corporate heavens”, the other two being Nevada and Wyoming.
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Few people know that little fact, but it was Wyoming that invented the American LLC in 1977, as it was modeled after the 1892 German company law known as Gesellschaft mit beschrnkter Haftung (GmbH). Nevada and Delaware copied Wyoming’s LLC and profited from it most through better marketing.
Wyoming is one of the best places to establish a company, and this is proven by the fact that a very high percentage of the companies dealing on Wall Street are registered in Wyoming.
The popularity of Wyoming as a “corporate heaven” in enhanced by the very liberal Corporation Law which enables companies to be established quickly with the broadest possible powers permitted under the law. There are little or no restrictions on any consequent business activities.
Here are some advantages of incorporating or forming LLC in Wyoming:
You can learn more about advantages of Wyoming over other states, as well as get help deciding whether you should or should not choose Wyoming as the state of registration by reading our article Start Your Business in Wyoming.
Wyoming is one of the three states commonly recognized as “corporate heavens”, the other two being Delaware and Nevada.
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Nevada has always been one of the most popular states for forming your company. Even though it doesn’t have the lowest incorporation fees and annual fees, it has plenty of advantages for businesses. Among these advantages, the most important ones are taxes, privacy of business owners and corporate law in Nevada.
Nevada takes it really seriously with attracting new businesses because of taxes. There are plenty of taxes which you have to pay in other states, but not in Nevada. Here are the main tax advantages of this state:
Similar to Wyoming, Nevada offers great advantage of protecting business owner’s assets, and keeping them pretty anonymous. If you incorporate in Nevada, you won’t be listed in public records. Also your personal assets are protected and creditors can’t go after your house, bank accounts, etc.
The state of Nevada saw enormous success of Delaware and their business law system. That’s why Nevada’s business law model is inspired by Delaware, and there is Nevada’s business court which is focused on business cases. This gives business owners the confidence that in case someone decides to sue their company, the case will be decided by experienced judges in a judicial system which is in favor of businesses.
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A Nevada corporation may issue stock for capital, services, personal property or real estate, including leases and options. The directors may determine the value of any of these transactions, and their decision is final.
Your company must be located and doing business in Nevada to get the full advantages of Nevada’s business-friendly environment.
No IRS information sharing agreement
Minimal reporting and disclosure requirements