Results 1 to 5 of 5
  1. #1

    Delaware or Nevada?

    To Incorporate as a Hosting Business. I have heard that Delaware is the best one to go off, but someone told me that Nevada is better (higher fees) but it has more benefits... And someone told me that on Nevada you have "information
    >sharing agreement with the
    >IRS.) " I'm not sure what that means though... I'm guessing that is Personal information and not taxes since they want their big paycheck of taxes


  2. #2
    Join Date
    Mar 2001
    Houston, TX
    Although I do not know the benefits of incorporating in Nevada, *most* companies incorporate in Delaware (as our parent company had).

    Web Hosting? Been there. Done that.
    I am niyogi.

  3. #3
    Join Date
    Dec 2003
    Cincinnati, OH
    Hehe, I read an "Imponderable" about this fact. Delaware is by far the most popular, but some others have better benefits. Your best place to incorperate depends on some details of your company, for the details of that you will need someone else to explain that.
    Hey remember when those Imponderable books sold off the bookshelf like hotcakes? LOL its fun to read them today... It has stuff about why VW woulden't bring back the "Beetle" and "What happened to pay restrooms?", fun to read now because its so dated.

  4. #4
    Join Date
    Aug 2000
    Originally posted by z280 Hosting
    Hey remember when those Imponderable books sold off the bookshelf like hotcakes? LOL its fun to read them today... It has stuff about why VW woulden't bring back the "Beetle" and "What happened to pay restrooms?", fun to read now because its so dated.
    Probably a great source for advice on where to incorporate, then, right? Just about as good as this thread, which is so full of misinformation that I don't know where to start in trying to get it back on track.

    Delaware got its reputation as a good place to incorporate in the 1940s because the passed state legislation to make hostile takeovers difficult. Beyond that, they have continuted to build a legislative and judicial precedent along those lines, protecting corporate shareholders. However, most of that is of no benefit at all to small privately-held corporations. Delaware is a common and sensible home for large publicly traded firms -- which, as another point, generally maintain offices in that state. If your small company doesn't do that, you have to hire an agent in Delaware to represent you there... and you may have to register in your own state as a foreign corporation because the locus of your business will be where you are, not in the state where you filed incorporation papers.

    In the past few decades, states like Nevada and Wyoming have made changes to try to bring business incorporation there. Among the differences between Nevada and Delaware are that Nevada has no corporate income tax (in either case, though, that impacts only the company profit -- you still pay taxes on anything you pay yourself as the owner or an employee... and there's still federal tax no matter what state you incorporate in). Nevada also has no state franchise tax.

    The mention of an "information sharing agreement with the IRS" above seems to read incorrectly. Nevada does not share corporate ownership information with the IRS. So, would you think of that as an advantage? If you're legitimately operating within the rules, it's not. And whether you are or not, there's a disadvantage to it: Nevada corporations are audited by the IRS at a rate higher than that of other states. You also might want to consider that people with whom you do business who know about this situation in Nevada -- and also that Nevada has lax rules about shareholder disclosure -- may hesitate to do business with a Nevada corporation. In short, some people see the main advantages to Nevada incorporation to be geared towards making deceptive practices easier.

    The bottom line is that for almost every US resident considering incorporation of a small business, the best choice is the incorporate in your own state. The advantages of going elsewhere generally are very minimal, and even any of what at first glance might seem to be financial benefits are outweighed by increased expenses and fees within your own state. The exceptions, corporations for which it may make sense to "shop around" for a home, are generally those that will be raising venture capital funding or that plan to "go public" in the future.
    Specializing in SEO and PPC management.

  5. #5
    Thanks JayC,

    Your post helped me a lot to understand, I guess that Nevada isn't the correct choice to incorporate in I have another question, a friend (who doesn't live in US) asked me wich state do I recommend for Incorporating his foreign corporation, could you give it a shot?

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts