A frequent problem of new businesspeople starting a company is where to incorporate the company. The general tendency is to incorporate your company in the state where you live. You may do all or most of your business in that state, or think youre more familiar with the bureaucracy there. However, you should be aware that you can incorporate your Corporation, or establish an LLC in any state that you like. Even if you dont have an office in a city or state, all states will let you appoint a registered agent, to act as an agent of process served. Process served can be any legal or tax matter that is brought to the attention of the corporation. The information is then immediately forwarded to the owners, whether it concerns summons, taxes or legal suits that you need to respond to.
If you conduct your business only or mostly in one state, it may make sense to incorporate your company there. However, many businesses that distribute goods and services use the Internet, the US Mail and other communications, to be able to do their sales across the nation, or even internationally. If that is the case for your business, you need to check out the advantages of forming a corporation or LLC in Delaware or Nevada. These states are well known as favorable places for corporations due to such laws as no state taxes, no personal income taxes, etc. If you are doing business in different states, you may want to consider incorporating in Nevada or Delaware. There can be other advantages of having a corporation in Nevada and Delaware. In Nevada, it is more difficult to pierce the corporate veil in the case of legal attempts to discover information of U.S. based branches of foreign corporations. The same is true in general in that state. Even thought the laws may be similar in Nevada as in California, the courts in California interpret them in a much more liberal manner. Having legal cases tried in Nevada courts can be thus seen as another advantage in incorporating in that state.
There are distinct advantages in forming a corporation or an LLC for your business, in order to product your personal assets, and gain the financial advantages that these entities have. In the case of all these company forms, the C-Corporation, the S-Corporation and the LLC, the owners are protected by the laws of limited liability. This means their personal assets have a degree of protection from seizure due to the activities of their company,
The IRS seems more comfortable with corporations, and to audit them less, as opposed to a sole proprietorship an LLC or a partnership. Corporation can issue dividends to its stockholders, which can spread out income and lower overall taxation. At the same time, this capital brought in to your corporation through going public can make it possible to readily expand operations. You can get others to invest in your corporation and instead of owing money to a bank or other creditors; you can sell them stock instead. |
