Incorporate in CA, DE or NV?

If your business is likely to grow into a big business and have a large number of shareholders, or go public, incorporating in Delaware or Nevada provide the most advantages. Their more management-friendly laws will likely outweigh the added expense and procedures of operating in multiple states.

Delaware

If you are seeking venture capital, consider Delaware. Delaware's laws specify fewer situations that require the approval of all the shareholders. Decision making can be quicker and less expensive because you don’t need to solicit shareholder votes. Venture capitalists often prefer Delaware corporations because the companies they fund can go public as soon as possible.

Nevada

Nevada's corporate codes, like Delaware's, have been designed to encourage businesses to incorporate there. Directors, officers, and shareholders do not have to reside in or hold their meetings in Nevada. They don’t even need to be U.S. citizens. $125 fee for filing articles of incorporation.

For short life-cycle companies, the advantages of Nevada and Delaware regarding corporate management benefits may take too long to be worthwhile.

California

If your company is in California, your primary advantage is saving money. You pay the fees required by just one state rather than two. Incorporating in California will save you time because you only need to account for the income generated in one state, file one set of state tax returns, and produce one regular set of corporate notice filings. California charges $100 (U.S.) for filing articles of incorporation.

Complements of James Burk, The Burk & Reedy Law Firm, Washington, DC

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