Deciding Which State To Incorporate Your Small Business In

Once you've decided to incorporate your small business the next step is deciding which state to incorporate in. A common misconception is that businesses must incorporate in their state of operation. You can, in fact, incorporate in any one of the 50 states and the District of Columbia regardless of where your business currently operates.

It is perfectly acceptable to incorporate in a state other than your current area of operation, but it is not always a good idea to do so. If your company chooses to incorporate in a state outside its area of operation life becomes a little more complicated. Your business becomes a "foreign corporation" in any state outside of the state it is incorporated in. If a corporation is "transacting business" in a state other than where it is incorporated, it must register for a certificate of authority to transact business in the other state or possibly lose access to that state's courts and face fines.

Registering for a certificate of authority, of course, costs money and is only one step in the process of qualifying to do business as a "foreign corporation" in another state.

There are advantages to incorporating in different states with regard to corporate laws and tax structure. Delaware is by far the most popular state for incorporation. Most of the fortune 500 companies are incorporated in Delaware.

Some of the most attractive features of incorporating in Delaware include:

1. Lack of corporate income tax for corporations incorporated in Delaware but not transacting business in the state.

2. Delaware has a separate corporate law system that uses judges appointed for their knowledge of corporate law as opposed to juries, whose knowledge of corporate law is limited at best.

3. Shares of stock owned by persons outside of Delaware are not subject to Delaware taxes.

For a small business deciding weather or not to incorporate in Delaware it is necessary to measure the cost of qualifying as a "foreign corporation" in the state of operation versus the amount that will be saved by incorporating a small business in Delaware. Typically it is not advantageous for small businesses to incorporate outside of their home state as even small businesses are usually required to pay corporate taxes in both the state of foreign operation and the state of incorporation. If you're not sure where to incorporate, visit www.small-business-assistance.com. We can help you decide if the cost of local incorporation will be less than incorporating in another state.

Jacob Wren operates Small Business Assistance ( http://www.small-business-assistance.com ) - a resource site for entrepreneurs that offers advice on incorporating and an array of other small business topics.

---

Entrepreneur to Employer

You make the decision to go into business and for... Read More

Hone Your Edge, Stay Focused

A common hazard faced by new entrepreneurs is a lack... Read More

Creating Lists to Learn About Yourself, Your Business and Your Customers

I love lists. I make them for everything. And I'm... Read More

Round Pegs In Round Holes: The Amazing Secret of Succeeding in Any Business Every Time!

Success is the desire of everyman on the face of... Read More

Small Business Credit Card Advantages

Obtaining a business credit card enables the small business owner... Read More

Small Business Failures in America - Cash Flow Issues

We are noticing an increase in the length of time... Read More

Arranging Your Fundraiser

When deciding to host a fundraiser for your company or... Read More

Truck Wash Business Case Study

Often smart entrepreneurs look for out of the way businesses,... Read More

Making Direct Mail Work for Small Businesses

If you own a small business, then you know the... Read More

Do You Really Need a Toll-Free Number for Your Business?

Do You Really Need a Toll-Free Number for Your Business?... Read More

Top 7 Small Business Tax Tips

Here are seven ways for owners of small businesses to... Read More

How Is the LEGAL SYSTEM Dishing Out JUSTICE in Your Town?

Thankfully, most of us will never find out. That is... Read More

Truck Detailing Shop Business Case Study

As an entrepreneur you can learn a lot by following... Read More

Comparing Boston Area for a mobile car wash business

The Boston suburbs seem to be rich with possible locations... Read More

4 Areas Where Your Business is Losing Money

In my 18 years of consulting I have heard it... Read More

Small Business Marketing: Specialize or Generalize?

There have been many great points raised on both sides... Read More

Franchise Territories are Generally Delineated On a Map; Why?

If you own a mobile service or home based franchise... Read More

Get Free Payroll Forms Download from the Internet

Having a successful business means also having a good working... Read More

Alliances: What works, what does not

Why Alliances FailWhen do you know an alliance is falling... Read More

Four Reasons Why Small Businesses Succeed (or Fail)

The American system of business management has been admired and... Read More

Internships: Good for Everyone

Many job applicants want a job but often do not... Read More

Over Disclosure Hurts Businesses

Many investors and business ethics professionals are calling for more... Read More

Five Tips for First Time Entrepreneurs

It seems so long ago that I started my first... Read More

What To Consider Before Buying A Franchise

Here are some useful tips on what to consider before... Read More

Blowing Your Own Horn ? A Key Marketing Strategy for Small Business

-- Building Credibility Through Success Stories --Successful solo entrepreneurs spend... Read More

Creative Business Card Marketing

Announcements can be handed out as a business cardAnnouncements can... Read More

Are You Ready to Own and Operate a Business?

How often has someone thought of starting a business based... Read More

Going Public: The Process for Small and Mid-size Companies to Go Public

It's the dream of every person who starts a business... Read More

Its Spring - Time For A Compensation Program Tune Up

Now that winter has passed, the annual ritual of spring... Read More

What Help is there for Veterans Starting a Business?

Some of the very qualities that attract people to the... Read More

Should I Franchise or Not?

A reader of one of my online sessions asked should... Read More

Outsourcing ? A Positive Approach For Small Businesses

Outsourcing is the strategic use of outside resources to perform... Read More

Is Your Business Legally Prepared?

It is imperative to have your business legally prepared. How... Read More