There are many questions to consider when starting a corporation or limited liability company (LLC): Why should I incorporate? How do I incorporate? Where should I incorporate? The list goes on and on.

One of the first and most important considerations is deciding which is the best state for starting a corporation or LLC. Many new business owners assume they need to incorporate in the state in which they do business. Not necessarily true. In fact, forming a company in your own state may have drawbacks compared to other states that have favorable incorporation laws, tax policies, and business litigation practices.

Starting a Corporation or LLC in Delaware:

When considering where to form their company, many business owners find that Delaware has the most advantages. Many new business owners decide to incorporate in Delaware for the same reason over 60% of Fortune 500 companies incorporate in the state. In addition to providing considerable tax savings, increased privacy, and asset protection for owners, Delaware has pro-business litigation policies. Instead of being held-up in court proceedings for years, Delaware’s Court of Chancery is notorious for expediency and fairness in all matters involving corporations and businesses. This makes Delaware an excellent state to form a company — especially for owners who may be concerned with litigation issues.

What’s Best for Your Business?

Where you incorporate your business is, well, your business. We encourage you to contact a business incorporation professional to understand the unique needs of your company. That being said, don’t assume that starting a corporation or LLC in your home state is the best option, even if you only plan on operating in your home state. After all, in addition to considering the benefits of incorporating in Delaware, it’s also important to consider what your business may look like down the road.

For instance, if you own a custom cookie company in Omaha, Nebraska, you may assume it’s best to incorporate in Nebraska. Let’s say your business name is "Not Just a Cookie Cutter," and you have a tiny shop downtown. What if you become incredibly successful and start growing out of your storefront? What if you want to franchise your business in other states? What if you’re destined to become a large corporation and overtake Mrs. Fields? If you incorporate in your home state, you may not have the same benefits of other businesses that have incorporated in Delaware. Why wait and restructure? You may be able to save money, time, and headaches by starting a corporation or LLC in Delaware.

When considering whether to incorporate in Delaware or your home state, see how your home state compares to Delaware’s:

• Tax savings

• Incorporation costs

• Privacy laws

• Business-friendly legal system

• Business financing opportunities

• Convenience and flexibility