Where to Incorporate Your Business
One of the most important decisions you need to make, after deciding to incorporate your business, is where you want to incorporate your business at. A corporation is not required to incorporate in the state they have their operations in; however, it is generally the easiest way. I highly advise to incorporate in your home state, at least for your first time anyway.
There are two main factors that should be weighed out when making this huge decision.
- 1)Make a dollar and cents analysis that compares the costs of incorporating in your state of operation versus qualifying to do your business as a foreign corporation in the state your considering.
- Determine the benefits and the detriments of each state’s corporate laws and taxation.
Many opt for the state in which the corporation operates in. It is usually easier and cheaper for the business to take this route.
If your corporation is going to be a closely held corporation and you plan on doing business primarily within one state, local incorporation is often preferable. The cost of local incorporation is generally going to be a lot less expensive than choosing to qualify to incorporate in another state as a foreign corporation. A foreign corporation that qualifies to do business in another state is subject to taxes and annual report fees from both the state of operation and the state of the qualifying incorporation. Another disadvantage that might come up, as bad as it may sound is very possible, is the chance of your corporation having to defend yourself in an out-of-state law suit against your incorporation. If you need specific advice on which state is the most preferable for your business, it’s best to consult an attorney or an accountant for this.
If during the life of your business, you find that your company needs to qualify for foreign business for out-of-state transactions, I suggest using BizFilings (found at www.bizfilings.com). They can assist you quickly and painless with this process.
