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I am often asked the question of where an entity should incorporate.  Many ask about Delaware.  Wyoming or Nevada are also options people raise.  The reasons these options come up first is because they offer flexible, pro-business laws.  Wyoming and Nevada also have low filing fees and no state income taxes.

So where should you incorporate?  If your business is small and has a small number of shareholders, you should incorporate in the state where you live and will work.  This will normally be where your business has an office and where you are doing business.   Why should you incorporate where you live?   The main reason is that for smaller companies, incorporating in a different state from where you are doing business will require you to have to deal with added fees, filings and paperwork. If you for example, you register a company in Delaware and run the business in California, you will have to comply with both jurisdictions.  The upside benefit will be low or may not exist at all for smaller companies. In short, for most small businesses the added hassle and fees are not worth it.

If you are opening a larger business that will do business in many States or where you plan to attract venture capital funding, you should consider a State like Delaware.

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