Why Do So Many Businesses Incorporate in Delaware?
Why Are Over Half of the Fortune 500 Companies Registered in Delaware?
Delaware is one of the smallest states in the US by both population and geographic size, so why is it home (on paper) to some of the world’s largest companies? Before we get into it, here are a few interesting facts about companies that decide to incorporate in Delaware:
- There are more companies incorporated in Delaware than the total population of the state.
- Over 65% of all Fortune 500 companies are incorporated in Delaware.
- Over half of all US publicly traded companies are incorporated in Delaware.
- More than 300,000 businesses are registered in a small, one-story building in Wilmington, Delaware.
- Walmart, Coca-Cola, Apple, Verizon, American Airlines, and eBay are among a handful of companies registered in that one building.
Why Do So Many Companies Choose to Incorporate in Delaware?
Delaware prides itself on having corporate-friendly laws, which is the main reason why so many companies register themselves in the state. Delaware laws and courts offer liability protection for business owners, business managers, and shareholders.
It is also easy to incorporate in Delaware. Incorporation costs are cheap. The business does not need to have a physical location or a bank account within the state, only a registered agent in Delaware. The main job of a registered agent is to forward annual notices and court notices to the business owner or manager.
There are no jury trials in Delaware, meaning cases are decided by a judge. This makes corporate trials more predictable which many business owners have enjoyed. Privacy is another benefit. Owners of LLCs and corporations are not required to list their names while filing the company. This can protect the owner’s identity, personal information, and privacy.
Delaware companies and their shareholders also benefit from tax savings.
Where Should You Incorporate?
With all the benefits being listed, it may seem like a no-brainer to incorporate in Delaware, but that is not the case. Each situation is different, and just because other companies have decided to incorporate there, doesn’t mean that it makes sense for you. Throughout the years, many other states have passed similar business-friendly laws to those of Delaware.
Analyze your individual situation, the benefits that each state brings, and decide where you want to incorporate.
If you are interested in speaking with our incorporation team at BridgehouseLaw, contact us. We’d be happy to help you.