Legal Question in Business Law in Delaware

Re: Deleware incorporation

If you have two or more shareholders/members, Delaware is more advantagous. The primary advantage is that it is much harder to break up a Delaware Corporation/Delaware LLC than it is a Maryland Corporation/Maryland LLC. Since business break up litigation could cost you over $250,000 per shareholder/member, if have any disputes with any other shareholder/member, going to Delaware may save you a lot of money in the end.

If you are technology company (I would include ebay reseller and graphic designer in this broad technology category too), then Delaware is your best alternative. Why? Delaware has a better court system than Maryland. The Delaware Court of Chancery hears all business and technology related disputes. The Court of Chancery has 5 judges, all of whom write 800 opinions each year on business law and technology law matters. All cases are usually decided in 8 weeks. In contrast it usually takes a year to get a decision in a Maryland court. If you a technology company and have any litigation with you customers, you could save a lot of money establishing in Delaware.

If you want angel investment or venture capital inestment for your business, then you have to establish in Delaware. Why? Almost all angel investors and VCs will require you to form your entity in Delaware as a condition for them giving you money.

I would only consider Maryland if all of the following is true: (1) you will never, ever have another shareholder/member (not even your spouse); (2) you will never become a technology business: and (3) you will never need investors.

Delaware is more expensive intially, but it is worth it in most cases.