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Advantages Of Incorporating In Delaware

Aug 17, 2007
The government treats corporations as separate entities that can buy, sell and lease properties, enter into contracts, sue and be sued. Specifically, there are many advantages of incorporating in Delaware. People form corporations to enjoy the benefits that incorporating offers, such as, limited liability protection. Their personal assets are safe and the shareholders are not responsible for debts incurred by the corporation. Incorporation establishes and increases the credibility of their company. There are excellent tax benefits that lure people to form corporations. Small businesses incorporate to build their business credit profile and grow. Some industry giants had humble beginnings as small businesses that evolved into giants after incorporation. Delaware has gained the reputation of being a corporate haven and correspondingly a number of corporations have chosen to operate from Delaware. People choose Delaware for various reasons.

Why Incorporate In Delaware?
1. The state's corporate law structure favors corporations.

2. Delaware has an experienced and well-established legal system regarding corporate law. The legal system has been credited with giving greater guidance regarding corporate governance. Corporate disputes are filed in the Delaware Court of Chancery, which is an equity court and chancellors hear the cases. Litigants may appeal to the Delaware Supreme Court. These chancellors are appointed by merit, based on their experience and knowledge of corporate law.

3. The cost of incorporation is low in Delaware. The initial cost of incorporation can be as low as $90! The cost of continuing to operate as a corporation is low as well.

4. There is no income tax for corporations that are incorporated in Delaware, but conduct transactions out of the state.

5. A single person can hold all offices of the corporation, such as, president, secretary, treasurer, and director. In Delaware, it is not necessary to list the names of the officers of a corporation in the articles of incorporation.

6. The minimum number of directors permitted in Delaware is one.

7. It is not mandatory for shareholders, officers and directors to be residents of Delaware. They merely have a resident registered as an agent to represent them in the state.

8. One of the major advantages of incorporating in Delaware is that shares of a Delaware corporation owned by people residing out of Delaware are not subject to taxation.

9. Names of stockholders are not revealed to the state.

10. Unlimited stock of any par value is allowed.

11. There is no minimum capital requirement for incorporation.

12. Corporate meetings and activities can be held outside of the State.

The Finalization of Incorporation
Once the business has decided to be incorporated, the Articles of Incorporation have to be filed with the Secretary of State and they may take 5 to 6 working days to expedite orders and 4 to 6 weeks to process non-expedite orders. Drafting the bylaws, naming directors, setting guidelines for operating the business, issuing stock certificates and opening a bank account in the corporation's name are the next steps of forming a corporation.

Additional Help
Software is available to run, maintain, and document records of a corporation. This makes the task of incorporation and running a successful business easier.
About the Author
David Gass is President of Business Credit Services, Inc. His company publishes afree weekly e-newsletter on Small Business Consulting at their web site http://www.smallbusinessconsulting.com
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