Incorporating in your home state, in your case Georgia, is usually the
best option for a mid-sized to small company where virtually all
business is to be conducted within your home state. This is usually
the preferred choice because it is the least costly and least
complicated.
For example, if you incorporate in a state other than your state of
operation you may have to qualify to do business in your home state as
a “foreign corporation.” Also, if you incorporate and operate in
different states you may have to file annual reports in both states
and may have to pay income and franchise tax in both states.
Incorporating in your state of operation will simplify procedures and
cut back on these redundant costs.
Finally, incorporating in your state of operation will allow you, or
someone closely associated with your company, to serve as your
company’s resident agent. Naming yourself or someone associated with
your company as resident agent ensures that you will personally
receive important documents without wasted time and money.
There are many websites out there that offer “online business
incorporation,” as a quicker, lower-cost option from hiring an
attorney to incorporate your business. However, before incorporating
make sure you choose a reliable site that offers the services that you
require according to your business’s needs. One of the more reliable
incorporation sites the net
is www. enitia.com.
What about Delaware?
Delaware has the longstanding reputation as the best state in which to
incorporate. Thousands of start-up companies make this choice every
year, despite the fact that they operate completely or partially in
states other than Delaware. The upfront benefits of incorporating in
Delaware are applicable to both large and small businesses. For
example, Delaware offers low incorporation and franchise fees.
Additionally, companies who operate all business outside of Delaware
are not subject to Delaware state income tax. Management Flexibility
is also an advantage, as Delaware allows a corporation with less than
30 shareholders to be managed directly by the shareholders.
Although Delaware incorporation may be beneficial to any size company,
it is the larger companies that have the most to gain. For instance,
Delaware incorporation is advantageous to companies who intend to
offer its shares to the public. For this reason the majority of
companies on the New York Stock Exchange, as well as 58% of Fortune
500 companies, are incorporated in Delaware.
Also, if you choose to incorporate in Delaware, you may have to
“qualify” to do business in other states that you operate in. This
means that you will probably have to qualify to do business in your
business’s home state. Further, you may have to file annual reports in
both Delaware and your home state of operation, and will likely be
subject to franchise taxes in both states. The cost and complexity of
the dual reporting requirements are more easily absorbed by larger
companies.
What about Nevada?
In recent years, Nevada has gained recognition for its favorable
corporate laws. As such, a growing number of out of state businesses
choose to incorporate in Nevada. The tax savings of incorporating in
Nevada is one advantage. Nevada does not tax corporate profits, there
is no state personal income tax, and there is also no franchise tax.
Shareholders of a Nevada corporation also enjoy the benefit of
complete privacy. In contrast to most states, Nevada has minimal
reporting and disclosure requirements. For example, Nevada does not
require shareholders to be listed on public record, as most states do.
However, like Delaware incorporation, larger corporations have the
most to gain from incorporating in Nevada. In fact, for smaller
corporations, the disadvantages of Nevada incorporation may outweigh
the benefits. For example, if you choose to incorporate in Nevada and
mainly operate in another state, you may have to “qualify” to do
business in that other state. Furthermore, all states have annual
reporting requirements, and although Nevada’s requirements are
minimal, it is generally less complicated to deal with the reporting
requirements of just one state- your state of operation- rather than
two. |
