Why do businesses incorporate in Delaware?

Delaware is one of the US’s smaller states but it actually attracts a lot of big businesses in terms of their incorporation.  In fact, more than half of America’s so-called Fortune 500 companies chose to incorporate in the state of Delaware.  In the New York Stock Exchange, there are also various companies that are incorporated in this state.  As with many businesses across the US, Delaware is like a top choice when it comes to incorporating businesses.  This is due to a lot of reasons but mainly due to the corporation-friendly laws and benefits that Delaware can offer versus other states.

Delaware’s main law regarding corporations is said to be a big benefit to various businesses and organizations.  This particular law is considered the basis for other corporation laws across the US because of its relevance to present-day business concerns.  With the Delaware General Corporation Law, companies are basically aware of their powers and their limitations.  In case of concerns arising in the corporate world, Delaware also established its own corporate law or justice system through the Court of Chancery.  This particular court is dedicated to handle corporation-related issues and therefore cases are processed swiftly and more efficiently.

There are also lots of tax benefits to companies when they register their corporation in the state of Delaware.  The annual franchise tax package is said to be more attractive when compared with other states. No tax is also imposed for sales and property for businesses that do not actually operate in the state but does the registration there.  For stockholders, they will also benefit in the sense that any shares that are accumulated outside of the state will not be subject to taxes.  These same people are also not held liable for corporate-related debts and they even have the power to change the company’s by-laws.  Overall, Delaware offers the most corporation-friendly environment in terms of laws, taxes, and benefits.

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