Which state should I incorporate in?

Which state should I incorporate in?

It is usually the best to incorporate in the state that you are planning to operate your business. It will be far less complicated and more cost-effective in the long run. A corporation is a legal entity which can do almost anything a person can do, such as enter into contracts, open a business, own real property, etc. Each state has a valid interest in protecting their citizens. This is one of the reasons why they require you to appoint a registered agent when you incorporate - to ensure that there is a valid address where a state's citizens can serve process if they are harmed and need to take legal action. A state needs the same assurance from a corporation formed out of state. It needs to know that the entity was properly formed (the state may require a "Certificate of Good Standing" from the home jurisdiction) and who the registered agent is. This information is disclosed in your Application for Authority to Do Business (usually called the "qualification" process.)

A company doing business in more than one state (numerous franchise locations for example) will be required to "qualify to do business" in the states other than the one in which it is originally incorporated. This means formally registering in these states, paying additional franchise taxes if applicable, state income taxes and multiple filing requirements.

Before deciding to form a corporation, you should consult with an attorney or an accountant to determine if a corporate structure is best for your business, and in which state to form your corporation. Some accountants and lawyers recommend forming a Delaware corporation. It is true that up until a few years ago, Delaware corporations did have significant tax and other advantages. This is no longer as true as it used to be. Nor may it be advantageous to form a corporation in Nevada, Wyoming, or any other state in America if you do not conduct business there. Delaware has an extremely well established body of law, does not seek to tax income earned in other jurisdictions, has an excellent, informed business court in its Court of Chancery, and is very pro-business.