Almost every Fortune 500 company in existence is registered in Delaware or Nevada, according to Entrepreneur. Their reasons are understandable, for example raising capital, but for small business owners and startup entrepreneurs, is incorporating in Nevada or Delaware the right answer? Here are a few things to consider before you set up shop on either coast:
Small businesses have different goals: Large corporations do not function like startups, naturally. There are many reasons why a big company might choose to incorporate in Nevada or Delaware, and it usually has little to do with tax savings. Make sure you consider your needs before filing in any state. Often times it is simply easier to register in the state where you are doing business.
You might end up paying state taxes: There are many states without state personal or corporate income taxes, but this is not the whole truth. If you do business in a state that charges any state taxes, you will end up paying up no matter what. In many cases this will be in the form of franchise fees.
Assets may be endangered: Personal asset protection from business liabilities depends on being registered in the state where you do business.
It may end up costing more: Incorporating outside of your state of residence adds additional fees, since businesses will be required to file a "foreign registration" document with their state of operation to conduct business in other parts of the country. These documents come with more filings fees and administrative costs, which will undoubtedly affect your bottom line.
In the end, make sure you do all your research before incorporating your business or forming an LLC, and consult with the experts if need be.