During the formation stage many new businesses forget to consider where they should file their new entity. Different states offer different tax structures, filing fees, levels of privacy and other business advantages. You are not required to effectuate your primary registration in the state in which you operate. (Do note that you may be subject to “foreign qualification”). For most small businesses, if you are not “doing business” in other states, registering in-state is the most advantageous option. However, when forming your business you should consider at least two alternatives: Delaware and Nevada.
Delaware: Though a small state, Delaware is home to more than half of the Fortune 500 companies, at least on paper. The Delaware Corporate Laws are the most advanced and flexible in the country and the Chancery Court is a unique branch that has written most of the modern U.S. corporate case law. Financiers are familiar with Delaware laws and protections and may be more comfortable entering into agreements with their entities. Delaware is popular not only for large and international companies, but in the modern marketplace, where small businesses can compete on a global level, it has proven advantageous for main street.
Nevada: Nevada is an incredibly business and tax friendly state. They have no personal, franchise or corporate income taxes, and as they do not collect such information, they do not provide corporate data to the IRS (all other states do). Additionally, the identity of corporate shareholders is not made available to the public. Nevada maintains low filing fees and some of the toughest liability and asset protection laws in the country. It is also the only state in which charging orders are the sole remedy for personal creditors making the attachment of business assets incredibly challenging.