Where should I incorporate?

The simple answer for the great majority of companies is that you should incorporate in the state in which your corporation intends to conduct the majority of its business. If you intend to do business in only one state, you should incorporate in that state.

If you feel you might be interested in incorporating in a state other than the one in which your corporation will conduct the majority of its business, you will want to consider the following issues:

 ·    What is the tax rate for the state(s) you are considering for incorporation?

·     What are the comparative costs of incorporation in a particular state versus the costs of registering to do business as a foreign corporation in that state?

·     What are the corporate laws of the state with regard to the rights and responsibilities of corporate shareholders, officer, and directors?

·    What are the corporate laws of the state regarding the rights of creditors?

If you incorporate in one state and end up conducting most of your business in a different state, you will have to qualify to do business in that other state, which will involve more fees and costs, more filing requirements, and more paperwork. If your business actually conducts business in more than one state, or if it is a large, publicly held corporation, it can be worth the additional cost and time to incorporate in one state but operate in another state or states.

A corporation doing business in a state other than its state of incorporation is considered a foreign corporation.