How to Choose Where to Incorporate

You don't always have to incorporate your business in the state in which you live. You can incorporate anywhere; however, Delaware, Wyoming and Nevada are common choices due to their pro-business laws. Consider all factors and perhaps consult your business attorney before making your final choice.

Steps

Choosing Your Home State

    1
    Register your corporation with your home state if you want the least expensive and easiest option.
        Registering in a different state will require a second registration in your home state if that's where you intend to do business. For example, if you form a Delaware corporation but the business is physically located in Florida, Florida will want you to register with them and your business will be termed as a "foreign corporation."
        You'll need to register as a foreign corporation if you want to secure any type of financing or business license, or purchase office space in your home state.
        You won't avoid any taxes or fees when registering as a foreign corporation; the fees are the same as if you would register as an in-state company from the beginning. In essence, you'll be paying double the fees since you will have to register both places.

Choosing a Different State

    1
    Consider Delaware, Wyoming or Nevada to file for incorporation.
        Most companies featured on the Fortune 500 or Nasdaq exchange choose Delaware for incorporation because the state's legal system is able to handle large, complex business litigation.
        Nevada is known to be a pro-business and low-tax state. The state also does not require an information sharing agreement with the IRS. Shareholders in Nevada can also remain private under a corporation. However, those directors and members under a limited liability corporation are part of public information.
        Wyoming also boasts lower corporation filing fees and annual fees as well as a pro-business climate.
    2
    Analyze the possible protection you would receive if you were a Delaware, Wyoming or Nevada corporation.
        Just by incorporating in Delaware, Nevada or Wyoming, you may find your company is less of a target against frivolous lawsuits. The laws in these states tend to protect the corporation more effectively than in others.
        If your business could be considered high risk, incorporating in Delaware, Nevada or Wyoming can offer more liability protection.
    3
    Evaluate convenience when it comes to incorporating in a different state.
        If you are planning on expanding to other states or having business partners in several different locations, incorporating in Delaware, Nevada or Wyoming is ideal. You can use this location as a headquarters so you aren't constantly setting up and dissolving corporations in different states.
    4
    Use Nevada, Delaware or Wyoming for incorporation if you won't actually be opening the doors of a business.
        Those who are independent contractors or work in holding property may find this option to be the most beneficial. Incorporating in one of these states will allow you to accept investments and receive payments without actually doing business.

Warnings

    Be aware of a business scheme in Nevada which encourages corporations to register there and then use phone lines, a Nevada forwarding address and bank accounts to trick the IRS. By using these techniques, the IRS and the corporation's home state may assume that the corporation is actually doing business in Nevada when in actuality the corporation is operating the business out of its home state. Be leery of anyone giving you advice to accomplish this. Contact your business attorney to clarify your legal obligations.