Why do I have to start a business in Delaware, USA, and How?

If you are thinking of starting a business in the United States, you might have heard that Delaware is the best state to incorporate. But why is that? And how can you do it?

Delaware is a small state on the east coast of the US, with a population of less than one million people. However, it is home to more than one million corporations, including some of the biggest names in the world, such as Apple, Google, Coca-Cola, and Walmart.

There are several reasons why Delaware is so attractive for businesses, especially for startups and tech companies. Here are some of them:

1. Delaware has a separate court system for business disputes, called the Court of Chancery. This court is composed of judges who are experts in corporate law and can resolve complex cases quickly and efficiently. The court also has a reputation for being fair and consistent in its rulings, which gives businesses more certainty and predictability.
   
2. Delaware has a flexible and modern corporate law, which allows businesses to customize their governance structure and terms. For example, Delaware allows businesses to have a single shareholder, a single director, and no minimum capital requirement. Delaware also allows businesses to adopt various provisions to protect themselves from hostile takeovers, lawsuits, or unwanted interference from shareholders.
   
3. Delaware has a low tax burden for businesses, especially for those that do not operate within the state. Delaware does not impose any corporate income tax, franchise tax, or personal income tax on businesses that are incorporated in the state but do not conduct any business there. Delaware also does not charge any sales tax or value-added tax on goods or services sold within the state.

So how can you start a business in Delaware? Here are the basic steps:

1. Choose a name for your business and check its availability on the Delaware Division of Corporations website.
   
2. Decide what type of entity you want to form: a corporation, a limited liability company (LLC), a partnership, or a sole proprietorship. Each type has its own advantages and disadvantages, depending on your goals and needs.
   
3. Hire a registered agent, who is a person or a company that can receive legal documents and notices on behalf of your business. You can find a list of registered agents on the Delaware Division of Corporations website.
   
4. File the appropriate formation documents with the Delaware Division of Corporations, along with the required fees. You can do this online or by mail. The fees vary depending on the type and size of your business.
   
5. Obtain an employer identification number (EIN) from the Internal Revenue Service (IRS), which is a unique identifier for your business for tax purposes. You can apply for an EIN online or by phone.
   
6. Open a bank account for your business and deposit your initial capital. You will need your formation documents and your EIN to do this. I opened my business bank account for my first Delaware LLC at Captial One Bank. It’s easy and I only had to deposit $300 to open the account! You also can open an account even without Social Security Number (SSN) which is required by most banks in the US. The only drawback is, if you are forming your Delaware company from outside the US, your physical presence in the US is required to open the business bank account.
   
7. Register your business with the relevant federal, state, and local authorities, depending on the nature and location of your business. For example, you may need to register for sales tax, payroll tax, unemployment insurance, workers’ compensation, licenses, permits, etc.
   
8. Start operating your business and comply with all the applicable laws and regulations.

Starting a business in Delaware can be a smart move for many entrepreneurs who want to take advantage of its favorable legal and tax environment. However, it is not a magic bullet that will guarantee success or avoid problems. You still need to do your research, plan carefully, and consult with professionals before making any decisions.

According to my business journey in the United States, I first registered my US business in Delaware in 2016. And I was able to capture the US market for my business Arriyon Creativ LLC ever since. The tax benefit is so amazing for me to easily run the company without worrying about the complexion of the taxation.

To register your business in Delaware, visit Harvard Business Services, Inc. which does services like Forming your Delaware company, Acting as a Registered Agent & Offering you legal street address service, Obtaining EIN, and more. I used Harvard Business Services to form my very first LLC in the US in 2016. Their services are the most affordable compared to other providers in the US.