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One of the first decisions a business must make after deciding to incorporate
involves selecting the proper state of incorporation. You are not required
to incorporate in the state where your business operates; you can choose
from any one of the 50 states or the District of Columbia.
In making the decision of where to incorporate, three factors typically
are weighed: the location of your physical facilities, a cost analysis
comparing incorporating in the state of operation versus qualifying
to do business as a foreign corporation in the state under
consideration, and determining the advantages and disadvantages
of each state's corporate laws and tax structure.
The decision typically is between
the state of operations and Delaware.
If the corporation is a closely held
corporation that does business primarily within a single state, local
incorporation is typically the best decision. The cost of local incorporation
will usually be less than incorporating in another state and qualifying
to do business as a foreign corporation in that state.
A foreign
corporation that qualifies to do business in another
state is subject to taxes and annual report fees from both the state of
incorporation and the qualifying state. Thus, the actual advantage of
incorporating in a state with very low or no corporate income tax is not
as great as it appears, if your business must still qualify to do business
in its state of operations.
We cannot provide legal advice, for
legal advice concerning where to incorporate, please consult an attorney.
Give us a call anytime if you have
questions. We are here to help. 1-800-981-7183.
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