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    What Are The Drawbacks to Incorporating in Delaware?
    Posted: 2012-10-25 05:00:41

    1. Annual Costs For A Registered Agent for Service of Process.

    If you incorporate in Delaware, you will be required to have a registered agent for service of process. The annual fees for this service vary, but companies such as Biz Filings and Legal Zoom charge $129 to $149 each year.

    2. Extra Franchise Taxes.

    If you incorporate inDelawareyou will not only have to pay the annual franchise tax in the states in which you are “doing business,” but also inDelaware.

    For example, if your company is headquartered inCalifornia, but you incorporated in Delaware, each year you will not only have to pay the $800 annual franchise tax inCalifornia, but also the annual franchise tax in Delaware.

    3.  Extra Reporting Requirements.

    If you incorporate inDelaware, you will have a second layer of reporting requirements.  For example, if you incorporate your company inDelaware, but are headquartered inCalifornia, you would have to comply with the reporting requirements in both states.

    If the benefits of incorporating inDelawaredescribed above are not important to your company, you may want to avoid the extra expense and time of being incorporated inDelaware.

    If you incorporated your company inDelaware, what have you found to be some of the biggest advantages and disadvantages?

    This article discusses general legal issues, but it does not constitute legal advice in any respect.  No reader should act or refrain from acting on the basis of any information presented herein without seeking the advice of counsel in the relevant jurisdiction.  Doug Bend expressly disclaims all liability in respect of any actions taken or not taken based on any contents of this article.

    Doug Bend is the founder of Bend Law Group, PC, a law firm focused on advising small businesses and launching startups. You can learn more about Mr. Bend by visiting his website:


    Disclaimer: Content on this website is provided for informational purposes only and does not constitute a legal advice.