Skip to main content

Are you a legal professional? Visit our professional site

Guided Legal Forms & Services: Sign In

Please enter a legal issue and/or a location
Begin typing to search, use arrow keys to navigate, use enter to select

Forming a Corporation: Where to Incorporate

One of the first considerations after a new business decides to incorporate is where to incorporate. For most small businesses, the answer may be as simple as registering in your business's home state, but questions can arise if you conduct business in another state, or if you are considering the state of Delaware as an attractive option (which is actually quite common). Following is a discussion on where to incorporate your new business.

We make business formation EASY. Learn about our DIY business formation services here.

Register in Your Home State

A standard rule of thumb is to incorporate in the state where the corporation will do most of its business. This rule holds especially true for smaller businesses that will likely not expand significantly, or that do not foresee conducting business outside of their home state. So, incorporating in your business's home state is usually the safest bet for your new business. Then if, after your corporation has been up and running for some time, it appears that you may need to conduct business in another state, you can always register in another state as a foreign corporation (see next section).

Each state has its own legal requirements and registration procedures for new businesses wishing to incorporate. To learn more about incorporating in your state, see FindLaw's Business Formation Resources section, which includes a state guide to incorporation laws.

Registering in Other States: 'Foreign' Corporations

When a business that is incorporated in one state wishes to conduct business in a second state, the corporation is considered a "foreign" corporation and may need to register prior to doing business in the second state. For example, if a registered New York corporation wishes to become authorized to do business in Connecticut, it will likely need to obtain a Certificate of Authority for Foreign Corporation from the Connecticut Secretary of State. Most states require that out-of-state corporations pay a filing fee in order to register as a foreign corporation.

The Lure of Delaware

Many large public corporations choose to incorporate their businesses in the state of Delaware. Traditionally, Delaware's corporation laws have been seen as friendly to business -- in the form of a business-friendly state corporations code, low costs of incorporation, lenient information disclosure requirements, and corporation-friendly income tax laws for corporations operating in the state.

For smaller corporations, balancing against these positive factors is the simple fact that, unless your corporation is physically located in Delaware, it will still need to register for operation (and likely pay income taxes) in your home state. The additional cost and time required to do so will likely negate any benefit that your small business might gain from incorporating in Delaware. In addition, recent trends have seen many states altering their laws to appeal to businesses, so in the near future corporation-friendly laws like those in Delaware may become more the rule rather than the exception nationwide.

Forming a Corporation? Get Support in the Process

Deciding where to incorporate and initiating the incorporation process are important steps on your business's path to success. To ensure that your new business complies with your state's legal requirements at every stage in the corporate formation process, you may wish to use a reputable business formation service or consult an experienced business attorney

You Don’t Have To Solve This on Your Own – Get a Lawyer’s Help

Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.

Or contact an attorney near you:

I'd Like Help From a Lawyer

Contact a qualified business attorney to help you navigate the process of starting a business.

Begin typing to search, use arrow keys to navigate, use enter to select

I'd Like a Do-It-Yourself Solution

Set Up Your Business - in Minutes!

We have a DIY option you can use to save time and stress. We help you:

  • Determine the best business structure
  • File the right paperwork
  • Stay compliant with the law

Show me the DIY option

 

Prefer to work with a lawyer? Find one right now.

Copied to clipboard

Find a Lawyer

More Options