Almost 500 companies get incorporated in Delaware every single day, and two-thirds of Fortune 500 companies are incorporated in this small state as well. If you are thinking about incorporating, you should consider Delaware as the top choice. Here is the summary of reasons, why this East Coast state attracted so many business in the last 50 years.
Flexible Corporate Law for Delaware corporations
Delaware is known for keeping its corporate law up to date and very business friendly. One third of state income comes from incorporation fees and revenues, and local lawmakers want to make sure it will continue to be the same way in the future. That’s why companies can be sure that if they incorporate in Delaware, they don’t have to be afraid of unpleasant surprises coming in the near future. Among others, these are the most important law advantages of incorporating in Delaware
- Flexibility in the corporation’s structure and allocation of rights among its shareholders.
- Asset protection – companies can include provision in the corporate charter that eliminates personal liability of directors and shareholders
- Privacy protection – company is not required to list director’s or officer’s names in the formation document.
Quality of Delaware courts and judges, Delaware Court of Chancery
The Delaware court of Chancery is known for focusing only on business law and handling only business cases. You can be sure, that your case will be handled properly according to the latest laws and business practices. And corporations prefer this Delaware court for one more reason – it uses only judges, no juries. Judges who have excellent knowledge of local business law and plenty of experience handling business cases.
Another legal reason why corporations are choosing Delaware is that most corporate lawyers in USA have studied Delaware corporate law in the school. Almost all legal textbooks rely on Delaware case law and most lawyers are familiar with the business practices in this state.
Venture capitalists & angel investors prefer to invest to companies incorporated in Delaware
Thanks to all the reasons listed above, you have better chance of getting funding from investors if you are incorporated in Delaware. Venture capitalist and angel investors are aware of all the advantages of having a company formed in this state, their lawyers are very familiar with Delaware business laws, and pretty much all of them have experience dealing with Delaware companies and corporations.
No state corporate income tax
If your company does not operate in Delaware, there is no income tax charged to your corporation.
No personal income tax for non-residents
You are not resident of Delaware but you want to incorporate in this state? No problem, and as an advantage, you don’t have to pay any personal income tax.
Thanks to all these advantages, Delaware is the most popular state for incorporating your business. Join hundreds of thousands of companies and incorporate in Delaware today.
Business Information & Rankings
- Delaware ranks 1st on the Work Environment Index. (2005)
- Delaware ranks 1st on the “Decent Work in America” study (UMass Amherst’s Political Economy Research Institute, 2005)
- Delaware ranked 18th for Friendly Business Tax Climate (The Tax Foundation, 2005)
- Delaware’s State/Local Tax Burden in 3rd lowest in the U.S. (The Tax Foundation).
Cost of Living Index
|For Wilmington, DE (2005):||Index Score|
|Misc. Goods & Services:||101.3|
Delaware is ranked 24th on the State Crime Index. (FBI, 2004)
Fees & Taxes
Business Inventory Tax
Delaware does not tax business inventory.
Corporate Franchise Tax
All corporations incorporated in the State of Delaware are required to file an Annual Franchise Tax report and to pay a franchise tax. The minimum tax is $35.00 with a maximum tax of $165,000.00.
Corporate Income Tax
The general corporation rate is 8.7%.
Gross Receipt Tax
Delaware assesses a gross receipts tax on the seller of goods (tangible or otherwise) or provider of services. Business and occupational gross receipts tax rates range from 0.096% to 1.92%, depending on the business activity.
Personal Income Tax
Variable. The income tax rate starts at 2.2% for income starting at $2,000 and going up to $5,000. Income over $60,000 is assessed at 5.95%.
Personal Property Tax
Delaware does not assess a state-level tax on real or personal property. Real estate is subject to county property taxes, school district property taxes, vocational school district taxes, and if located within an incorporated area, municipal property taxes.
State Sales and Use Tax
Delaware does not levy a general sale or use tax.
Delaware’s new employers pay 2.5% for 2 years.