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Where to Register a Company in the USA?
Once you decide to register a company and start your business, you will need to choose the type of your company and the State where to register. You can research online what kind of companies are in the USA, or consult with an American attorney who specializes in corporate law.
Now about the State where to register. If you are a US resident, it makes sense to register your company in the State where you live and do business. The reason for this is quite simple. Even if you register your company in another more business-friendly State, in addition to that, you will have to register your LLC or Corporation as a foreign company in the State where it does business or has an office. However, if you don’t do business in America or, on the contrary, you have business activities in more than one State. Then it would help if you considered registering your company in one of the most business-friendly States.
The Shortlist of Business-Friendly States
There are numerous researches and rankings on this topic. One of the most well-known is the list of the “10 Best States for Business” by US News and World Report.
Being measured by more than 70 metrics, the shortlist of States “best for business” will probably work if you think about where to move and start your business there. Otherwise, if you do business in more than one State or outside of the USA, your first and foremost criterion of “business-friendliness” will be the state tax policy.
The US States ranking by the 2021 Tax Climate, being measured by a corporate tax, individual income tax, sales tax, property tax, and unemployment insurance tax, looks as follows:
- South Dakota
- New Hampshire
- North Carolina
At the same time, having acknowledged that tax considerations are essential, there are other things one should take into account when thinking about where to register a company. Namely, how easy it is to set up a company in a particular state, the requirements, how long it will take, etc.
Why Incorporating in Delaware?
Although the State of Delaware is not on the list of the top 10 above, it has some critical benefits, making it a State of choice for many big, medium and small businesses. First, Delaware also has a business-friendly tax policy. For instance, companies registered in Delaware but not doing business there don’t pay corporate state income tax. Second, filing an LLC or Corporation in Delaware is relatively easy in comparison to other States.
In addition to that, Delaware laws help protect your privacy. For example, you don’t need to disclose the names of your directors and officers if you registered in Delaware. Another thing, residency in Delaware is not required when registering a company. And you can considerably slim down your corporate structure if needed. For example, the same person can be a shareholder, director, and officer, etc.
But most importantly, Delaware has a business-oriented advanced legal system and a special corporation court – The Delaware Court of Chancery. This court has the most experienced judges and more than 200 years of judicial precedent. It is the oldest business court in America.
Another significant benefit of incorporating in Delaware is its reputation among institutional investors. Venture capitalists, investment banks, and funds usually prefer Delaware corporations. So if you have plans to raise venture capital or go public, you’d be better off incorporating in Delaware.
According to the official State statistics, approximately 68% of the Fortune 500 companies and 93% of all US companies that launched their IPOs were registered in the State of Delaware.