Does It Make Sense to Set Up a Business in Delaware?

Expert Legal Advice for Your New Venture

When you're starting a new business, one of the most important decisions you'll face is where to incorporate. Delaware often stands out as a popular choice for companies across the United States due to its reputation as a business-friendly state with a well-established legal framework. However, while it's a go-to for many large corporations and startups, selecting Delaware as the destination for your enterprise isn't necessarily the right decision for everyone. Understanding whether it makes sense to set up a business in Delaware requires a closer look at the specific pros and cons as they apply to your unique situation.

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Our experienced attorneys are ready to help decide if Delaware is the right place to set up your business.

The Upside to Incorporating in Delaware

First, let’s review some positive aspects of setting up a business in Delaware. For one, they have a Court of Chancery. This court caters to corporate cases, making companies incorporated in Delaware attractive to angel investors and venture capital firms. The State’s tax laws also provide significant advantages for LLCs. For example, they are not required to file annual reports, their annual tax is just $300 and their filing fees are just $90. Additionally, Delaware’s formation documents don’t mandate a specific address, offering a degree of privacy that many other states don’t.

Possible Challenges of Doing Business in Delaware

Now let’s explore some potential drawbacks of setting up a business in Delaware. Delaware's tax laws offer little benefit to smaller companies, which must still file reports and pay franchise taxes there while handling taxes and paperwork in their home state. Many states also have regulations preventing businesses from shifting earnings to Delaware for tax advantages. Additionally, incorporating in Delaware can double the administrative work, requiring registration and reporting in two states. Legal disputes must be handled in Delaware, increasing travel and legal costs.

Professional Guidance from Experienced Attorneys

At Tempus Fugit Law, we are here to help you navigate the complexities of choosing the right state for incorporation. Our approach begins with a personalized assessment of your business's structure, industry and future growth plans. If it makes sense to set up a business in Delaware, we can guide you through the process, ensuring compliance and minimizing risks along the way. However, if Delaware's advantages don’t align with your specific needs, we’ll help you identify the best alternative that suits your business model. Whether it's Delaware or another jurisdiction, you can count on our legal team to help you make informed decisions that position your business for long-term success. Reach out today to start the conversation.

Find out if it makes sense for you to set up a business in Delaware. Call (617) 752-2371, email inquiry@tflawllc.com or contact us here on our website to request a consultation.

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