Company Structure, Formation & Corporate Basics

Where to incorporate

If you plan to raise external funding for your entity, then you should incorporate in Delaware. Delaware offers several advantages over other states. For many years, the legislature in Delaware has sought to attract companies to incorporate in Delaware by adopting a relatively company-friendly set of laws under which to operate. Delaware has a separate court whose sole job is to try cases under this set of laws, and so there are many published decisions interpreting these rules. 

Because so many other companies are incorporated in Delaware, lawyers, directors, investors and future acquirers of your business will all have a solid understanding of the laws governing your company, which makes it easier, more efficient and more comfortable for them to do business with your company (e.g., serve on your board or invest in/buy your company). Several other states have adopted laws that either mimic those in Delaware or that are intended to be even more company-friendly. However, Delaware has such a head start with a well-established set of court interpretations and with practitioners, directors, investors and others that understand the rules, the right choice for most companies will be Delaware.