Why Do Companies Register in Delaware—Main Reasons Explained
With more than 2 million registered companies in the state, Delaware seems like a popular choice among corporations for starting their journey. So, why do companies register in Delaware? Some of the common reasons are the corporate-friendly filing process, regulations, and court system.
From lenient tax laws to privacy, the state offers multiple benefits to new and established corporations. But the question still stands: Is it worth incorporating a business in Delaware?
Today, we'll take you through the benefits of forming a company in Delaware, as well as explain whether you should register with the state and how Harbor Compliance can help you incorporate and license your business.
Benefits of Incorporating a Business in Delaware
Some of the biggest benefits of forming your business in Delaware include:
- Tax benefits and flexibility
- Corporate court
- Better privacy
Tax Benefits and Flexibility
Two primary reasons companies choose to register in Delaware are its flexible formation process and tax structure. You can incorporate a firm without being physically present in the state.
As long as your registered agent has a Delaware-based address, you won't face any problems. Additionally, companies that don't do business in the state are exempt from paying corporate income tax. There are also certain taxes that aren't imposed, such as:
- Inheritance tax
- Personal property tax
- Investment income tax
However, you will have to pay a franchise tax when incorporating your company in the state, which starts at $175 and increases based on the size of your business.
Corporate Court
Unlike other states, Delaware resolves corporate-based cases in the Court of Chancery. Judges in this court are experts in corporate law, which allows businesses to resolve lawsuits and other cases more quickly compared to normal civil courts.
Better Privacy
Like other states, Delaware requires beneficial ownership information (BOI) reporting under the Corporate Transparency Act (CTA), but it still does not publicly disclose this information. Only certain government agencies can access the data, which provides a layer of privacy.
Is It Worth Registering a Business in Delaware?
Delaware is generally regarded as a favorable option for startups seeking to attract big investors or capital. However, it may not be best for small businesses to register their organization outside of their home state.
If you form your company outside your home state, you'll have to apply for a foreign qualification in your home state. This can be a time-consuming process, which is why it's best to opt for a professional service provider like Harbor Compliance. Our team of professionals can guide you through the incorporation process and undertake other regulatory tasks like business licensing.
Outsource Business Registration and Licensing to Harbor Compliance
At Harbor Compliance, we can help you prepare and file the necessary paperwork to launch your business. We can guide you through the entire process, from selecting the right structure to understanding required registrations and completing government forms.
We provide various solutions that can help you through your entity's lifecycle, including:
- Annual reports
- Registered Agent Service (including serving as your registered agent and appointing or changing the current one)
- Foreign Qualification Service
After forming your business, you'll have to obtain a general business license to legally offer and provide services. Our Managed Annual License Service enables you to get your business license with minimal effort and maintain good standing with your state. Here's a quick rundown of what we offer:
- Expert guidance—Our team specializes in navigating intricate state requirements. We'll work to find which licenses your business needs according to Delaware or other state requirements.
- Filing and renewal—From preparing your initial application to renewing your license, we ensure everything is done on time, allowing you to focus on your primary work.
- License Management—Using the License Manager, one of the modules in our Software Suite, you can easily access all your entities' licenses and check renewal dates. With an integrated requirements database, you'll always be one step ahead of jurisdictional changes.
How To Get Started With Harbor Compliance
You can order our Managed Annual License Service by following the four steps below:
- Visit the Business License Service page.
- Click the Order Online option.
- Fill out the form with your business information.
- Confirm your purchase by clicking Check Out.
Additional Harbor Compliance Services
In case you need help meeting other regulatory requirements in Delaware or any other U.S. state, we can help through various additional services:
| Service Category | Services |
|---|---|
| Document filing and retrieval | Certified copies, Certificate of good standing, Drop-off Filing, Articles of reinstatement, Certificate of Authority |
| Industry-specific licenses | Construction, Architecture & engineering |
| Tax services | Payroll tax registration, Sales and use tax registration, Employer Identification Number (EIN) |
| BOI reporting | BOI reporting, Records Manager |
| Entity lifecycle management | DBA registration, Amendments, Name reservation, Initial and annual reports |
| Nonprofit formation | Incorporation, 501(c) tax exemption, Charitable registration |
Turn to Harbor Compliance for Effortless Licensing Management
Delaware is often seen as a strong choice for registering a business due to the specialized court system, tax advantages, and corporate privacy. However, it may not be the best option for small businesses considering registration outside their home state as it requires going through the foreign qualification process.
Whether you need help registering, foreign qualifying, or licensing your business, you can delegate this workload to Harbor Compliance. Our Software Suite and Managed Annual License Service will help you through every step of registering and licensing your business.
Get a Harbor Compliance Score™ to see your entity's current standing with the state, contact our team to explore additional services, or schedule a demo of our robust software.
Find out how licensing works in other U.S. states by referring to the table below:
