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Going along with this "Incorporating in Delaware" thread, does anyone have information with the differences between incorporating in Delaware versus Nevada (or

by daemin 17y ago

Going along with this "Incorporating in Delaware" thread, does anyone have information with the differences between incorporating in Delaware versus Nevada (or other states)?

skmurphy 17y ago
If you are based in CA you will end up having to pay the same fees and taxes to CA as if you had incorporated here, you have to register as a "foreign corporation" if you have an office or place of business here.
grellas 17y ago
Nevada is favored as a state with no income tax and with stricter privacy protections. If you actually run your business from Nevada, you can get the benefits of both. Delaware, in contrast, offers no particular advantages with respect to tax or privacy. If mainly offers what might be called corporate efficiency - it is a well-oiled machine for mature companies wanting to place a premium on control of the company's affairs. It also has a well-developed corporate law enabling public companies who are sued over complex corporate transactions to have excellent and well-developed legal authority around which to plan their legal affairs. Concerning Nevada, though, if you do not have a true presence there, you get no special tax advantages because you have to pay state income taxes in the state from which you conduct your business. As noted by skmurphy, you would also have to register as a foreign corporation in your home state. I believe a good number of people go the Nevada route via online services and then simply ignore the rules (i.e., they don't pay state income tax in their home state in the belief that a Nevada corporation does not need to). As a lawyer, of course, I can't advise this even though it may be a common practice. It is plainly illegal and, if it catches up with you, you will significant tax and other troubles. There are cottage industries set up about the Nevada (and Delaware) incorporation process, mostly consisting of online filing services. They have a motive not to disclose the problems associated with out-of-state filings and often promote misinformation on these issues. This is not to say that incorporating in Nevada or Delaware is not good for some companies. It is. It just has to be the right situation.
- skmurphy 17y ago
  We have had a few folks come to Bootstrappers Breakfasts that went the Nevada route because of encouragement by third parties. At least for CA companies it has always ended in no savings and in some cases worse.

by daemin 17y ago

Going along with this "Incorporating in Delaware" thread, does anyone have information with the differences between incorporating in Delaware versus Nevada (or other states)?

skmurphy 17y ago

If you are based in CA you will end up having to pay the same fees and taxes to CA as if you had incorporated here, you have to register as a "foreign corporation" if you have an office or place of business here.

grellas 17y ago

Nevada is favored as a state with no income tax and with stricter privacy protections. If you actually run your business from Nevada, you can get the benefits of both. Delaware, in contrast, offers no particular advantages with respect to tax or privacy. If mainly offers what might be called corporate efficiency - it is a well-oiled machine for mature companies wanting to place a premium on control of the company's affairs. It also has a well-developed corporate law enabling public companies who are sued over complex corporate transactions to have excellent and well-developed legal authority around which to plan their legal affairs. Concerning Nevada, though, if you do not have a true presence there, you get no special tax advantages because you have to pay state income taxes in the state from which you conduct your business. As noted by skmurphy, you would also have to register as a foreign corporation in your home state. I believe a good number of people go the Nevada route via online services and then simply ignore the rules (i.e., they don't pay state income tax in their home state in the belief that a Nevada corporation does not need to). As a lawyer, of course, I can't advise this even though it may be a common practice. It is plainly illegal and, if it catches up with you, you will significant tax and other troubles. There are cottage industries set up about the Nevada (and Delaware) incorporation process, mostly consisting of online filing services. They have a motive not to disclose the problems associated with out-of-state filings and often promote misinformation on these issues. This is not to say that incorporating in Nevada or Delaware is not good for some companies. It is. It just has to be the right situation.

skmurphy 17y ago
We have had a few folks come to Bootstrappers Breakfasts that went the Nevada route because of encouragement by third parties. At least for CA companies it has always ended in no savings and in some cases worse.