Company Incorporation

10 Advantages of Incorporating Your Company in Delaware, USA

Certain countries or states in the world are better than others to start a business because of the laws and regulations of that place. Delaware, USA is one such place where it is easier and beneficial to incorporate a company.

Delaware is a small state in the USA that has enormous importance in the world of corporations. Trade companies and Fortune 500 companies are incorporated in Delaware. For over 10 years, it has been named as the best legal climate to incorporate a company in the US. When the business is weak in the US, then the Delaware corporations will not collect corporate taxes. 

As an Indian, have you ever wondered if you can incorporate your company in the USA? How will it benefit you? Where in the USA should you incorporate your company? If you have had such questions, the answer is yes and Delaware is a great option. Read on to understand why. 

Incorporation in Delaware

Incorporating your venture in the USA is possible and comes with loads of benefits. If there is one state which is ideal to take off, it is Delaware.

Almost half of the United States publicly traded companies and Fortune 500 Companies such as Coca-Cola, Walmart, Apple, Google etc. are incorporated in Delaware. It is voted as the best legal climate for corporations as it provides the following advantages:

1. Investors Friendly

Delaware corporations are most sought after by investment bankers and venture capital investors compared to other states and business structures. For initial public offerings (IPO) Delaware corporations are preferred by the investment bankers.

It is better to incorporate your business here if you are considering venture capital funding or going public, instead of having to adapt your business when that is demanded by a venture capitalist or investment banker.

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2. Ideal for Start-up Incorporation

For a new business seeking to attract external investment from angel investors, private investors, and venture capitalists, incorporating in Delaware is often the ideal route to get there. Many people are just willing to invest in a Delaware C company, so starting from the outset of a Delaware company will save a lot of legal and accounting problems later. 

Delaware’s investment and compliance laws are in line with qualified investor standards. Even if you are launching your startup in Delaware as an LLC, one can easily transfer the LLC to a C corp with one state filing and one IRS filing.

3. Ideal for Virtual Companies

With the introduction of cloud storage, smart devices, and fast file sharing, many enterprises are distributed across the nation or the globe. The best place to incorporate for a highly mobile company is in a jurisdiction where there are few intertwining regulations, such as complex mandatory yearly franchise tax – even when no business is conducted in that state. Because Delaware does not tax businesses working outside its boundaries, it is simpler for a Delaware corporation to register or unregister in other states whenever required.

4. Court System

The court system is also well recognised and highly appreciated. It has a separate Court of Chancery which concentrates on corporate matters and uses judges instead of juries. By this, we can tell that if your business involves any kind of litigation you can get a judge with a huge proficiency in complicated corporate law matters. Thus, your issues will be resolved better and at a faster rate.

5. Tax Haven

We call it the tax haven as it has many business-friendly tax laws. When you don’t do business in Delaware, the state does not collect any corporate taxes. It doesn’t levy a tax on royalty payments, intangible assets, etc. These kinds of tax policies assure benefits for the corporation.

The owners also have a chance to choose in which way their business should be taxed such as partnership, C Corporation, S Corporation, or sole proprietorship.

6. The flexibility of Corporate Structuring 

The statutory laws in Delaware are rather versatile as to how you will organise the representatives of the company and board. Delaware allows a single person to be a corporation’s sole director, shareholder, and officer. In other states, you may need at least three individuals to fill the roles of officer and managers or directors.

7. Gold Standards for Companies

Corporate lawyers around the US are well versed in Delaware law, so if your business wants to get professional advice or other supporting documents you’ll have a benefit. Delaware receives one-third of its state budget from company incorporation, including registration fees, annual fees and taxes, and the legal research involved. Moreover, you can be confident that the state has an interest in holding the laws up-to-date, responsive to the needs of today, and ensuring that all the participants in the environment are highly integral.

8. Privacy Policies

You don’t have to disclose information about the possessor or formation documents of a Limited Liability Company (LLC) to the Delaware state. Further, Delaware protects information like no other US state. Here, the only requirement is for one to have a registered agent and designated contact person.

9. Flexible Business Structure

Firstly, corporate statutes are flexible in terms of the structuring of the corporation and board members. For instance, directors, officers, and shareholders need not necessarily be residents of Delaware.

A single person can start a company where they can hold the positions of a director, officer, and shareholder which is not the case with other states.

10. Maintenance and Filings

The maintenance cost of a company is very minimal and not very expensive. Every year an annual franchise tax fee of $300 is collected. Along with this, one must also pay the registered agent fee.

Filings are processed in less than an hour whereas in other states it takes more than 24 hours and is very expensive. 

Conclusion

There are various advantages of Delaware company registration in the USA. It is investors friendly, has a great court system, is a tax haven, offers great flexibility and more. 

If you are looking to incorporate your company in the USA, Vakilsearch can help you with it. Our USA company registration service can take care of all the complicated tasks of company registration for you. 

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