Which State Should You Incorporate In?

July 27, 2011 by Meghan Cole

After you make the decision to incorporate your business, one of the next big decisions you will have to make is deciding which state to incorporate in.

Some things to keep in mind here are:

  • The state in which your business is located is referred to as your home state.
  • The state the corporation or LLC is formed in is called the Domestic state.
  • All other states that you plan on doing business in other than the Domestic state are known as Foreign.” It is important to understand that when you incorporate in another state, you still have to register to conduct business in your home state.  You will be required to file a foreign qualification to conduct business in each. This will require you to pay additional state fees on top of the fees you are paying to the state you domestically formed in.

When going through this process, which can be confusing, it is important to work with an incorporation service provider that can guide you through the process.  The advantage of working with a team like ours is that Laughlin Associates can provide you with one-on-one customer service.  It is important that you are walked through every step of the incorporation process and we’ll help you do just that.  We will answer your questions and help ensure your corporation or LLC is set up correctly. When it comes to incorporating your company with us, there will literally be no stone left unturned.

Preferred States

There may be advantages when it comes to incorporating in “foreign” states over forming the entity in your home state.  Some states are €œpro-business and draft their corporate and tax laws to attract more companies to their state.  These are called Preferred States as they are preferred for their business advantages.  Three states that appeal to small business to incorporate in are:  Nevada, Wyoming, and Delaware. These three states offer unique advantages that may work in your business favor.

Some advantages to incorporating your business in a preferred state are:

  • No state corporate income tax
  • No minimum capitalization requirements
  • Privacy structuring is obtainable with proper implementation
  • Nevada and Wyoming have no franchise tax (initial and annual statement fees and business license fees apply)
  • Nevada offers charging order protection on Corporations, LLCs, and LPs

There are always advantages and disadvantages when it comes to Corporation/LLC formation and the structuring of your business entity.  The key is to find the correct and trustworthy answers and to know how to properly implement them into your business structure.  To further explore how to incorporate in your home state or whether a preferred state offers enough advantages for you to pursue, contact Laughlin Associates to answer any questions you have.

You can call me anytime between 8 a.m. and 5 p.m. PST just call 1-800-648-0966 or drop me a line at rhaines@laughlinusa.com.