By: Jack Vale
It might be surprising to learn that Delaware is home to over a million companies, let’s explore the top seven reasons why our Small Wonder is home to many startups:
- Delaware ranks #1 for patents issued per capita. Startups looking to bring a new product or invention to market might find success in Delaware. With the state’s generous giving of patents to applicants, you might find a better chance of patenting your product if you apply in Delaware.
- Venture capitalists are more likely to come knocking. Delaware’s laws are often considered ‘business-friendly.’ Startups in Delaware benefit from slightly altered laws which would cause fewer taxation issues for investors than an S-Corp or LLC Delaware would. Also, if your business registers as an S-Corp, you are much less likely to receive venture capital investment because the laws prevent an organization from investing.
- It’s well-known as a ‘tax haven.’ Companies starting up in Delaware can enjoy favorable tax laws that aren’t usually available in other states. Delaware startups can operate outside of the state without incurring corporate tax on goods and services, incur no inventory tax nor need to file any VATs. The only tax required to be paid in Delaware is a ‘franchise tax.’
- Your startup’s details will remain more private. In Delaware, there is no legal obligation to state the name of any company founders or LLC members inside formation documents. This will help keep personal details of your startup out of the public domain.
- It can take under an hour to register a company. In Delaware, you need very little information to be able to form a startup. Essentially, all you need to do is have an available company name and hire a Delaware Registered Agent to help you file the company and receive any permits.
- Corporate legal issues can be solved in days. Delaware’s legal system has a ‘Court of Chancery,’ meaning that any corporate disputes can be solved quickly by judges trained in corporate law. In other states, disputes involving shareholders and other business entities would potentially take months or even years to complete.
- You will be taken more seriously by customers and investors alike. When a business is registered in Delaware, it sends a message that they are looking to expand nationally. Investors and many customers know that many reputable corporations are located in Delaware, so they will have more faith in your ability to deliver what you are selling.