Business owners considering incorporating their Florida enterprises may think about doing so in Delaware. The reason? Delaware has a business-friendly reputation. Before moving forward, however, it’s important to know if there are benefits to filing for Delaware incorporation versus doing so in Florida. Therefore, if you are currently deciding on the best place to establish your legal entity, you need to know: Should I incorporate my Florida business in Delaware?
Benefits of Incorporating in Delaware
According to a recent report, 68% of Fortune 500 companies and 93% of all U.S.-based initial public offerings are incorporated in Delaware. Why Delaware? One of the primary advantages of incorporating in this state is its beneficial tax structure. Businesses that incorporate in Delaware but are not doing business in the state don’t have to pay corporate income tax. Additionally, the state does not have personal income or property taxes. Nor does it impose sales, inheritance, or investment income taxes. However, those entities registering in Delaware must pay a franchise tax. Although Delaware residents do have to pay taxes on their income, companies may be able to organize in a manner that avoids this tax liability.
Businesses that incorporate in Delaware also have an expedited filing process. Entities can often obtain a certificate of good standing in a single day. Additionally, under Delaware law, one person can serve in numerous positions. For instance, you or another party could be the corporation’s director, officer, and shareholder. Not every state allows for this structure.
Delaware corporations also provide companies with privacy. In this state, the only name that must be disclosed in association with the corporation is the registered agent’s name, which means that officer and director identities may remain private. Delaware also has a dedicated corporate trial system that is used when there are issues and disputes. The dedicated courts are overseen by judges who specialize in corporate law, and there are no jury trials for these cases. These cases are also usually taken up sooner than those in a traditional legal setting.
Reasons Not to Incorporate in Delaware
While it’s true that Delaware incorporation offers certain benefits, it may not be the best choice for everyone. For instance, Florida small business owners would still have to comply with the business requirements for their home state as well as Delaware. This includes filing an annual report in Florida. In addition, Florida businesses incorporated in Delaware would also have to register with the state. A Florida small business registered in Delaware would also have to travel to Delaware for legal proceedings. This would also involve hiring Delaware counsel as well as a Florida small business attorney.
There are also certain filing and annual fees the business would have to pay to incorporate in Delaware. Entities would also only be required to pay fees to one rather than two states. Additionally, the state charges numerous other fees associated with incorporation and requires incorporated entities to complete several forms. By contrast, when a Florida business incorporates in the state, the process only requires a few steps. Florida registration also provides the benefit of only having to adhere to one state’s laws rather than two. Further, incorporating in Florida allows legal disputes to be resolved in the business’s home state.
Deciding where to incorporate is a crucial step, and it’s important that you have the guidance you need to make an informed decision. The best way to determine where to file for incorporation is by consulting with an experienced Florida business attorney. Your business lawyer can help you evaluate your options and determine the best incorporation options for your Florida business.
Contact an Experienced Florida Business Attorney
Attorney Richard Sierra at the Florida Small Business Center assists clients like you with business and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. We represent small business clients throughout the State of Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, West Palm Beach, Jupiter, Deerfield Beach, Stuart, Port St. Lucie, Orlando, Naples, Fort Myers, Sarasota, Tampa, and surrounding communities.