Why Delaware?

Why Delaware?

Delaware Road Sign with dramatic clouds and sky.

Why do people sometimes register their business entity in Delaware?

For large businesses, Delaware holds many advantages—but smaller business may not find it as beneficial. For example, Delaware’s business law is one of the most flexible in the country.  The Delaware Court of Chancery focuses solely on business law and uses judges instead of juries.  For corporations, there is no state corporate income tax for companies that are formed in Delaware but do not transact business there (but there is a franchise tax).  Taxation requirements are often favorable to companies with complex capitalization structures and/or a large number of authorized shares of stock.  There is no personal income tax for non-residents.  For large corporations with thousands or hundreds of thousands of shareholders, this can be a big plus.  However, for smaller businesses, you have to ensure that if you incorporate somewhere other than the state you are doing business in, there has to be a registered agent in Delaware to accept service on your behalf.

Why do Human Resource guidelines matter?

They are some of the most important procedures a business owner should put in place right after they hire their first employee.  For small businesses and large conglomerates alike, the human resources or personnel function can be helpful for much more than simply processing payroll or handling the open enrollment season once a year. Human resources plays an essential role in developing a company’s strategy as well as handling the employee-centered activities of an organization.  Human Resources is also the first line of defense for businesses to avoid employment litigation claims.

What should I be looking for in an investor?

In many ways, an investor will a partner for you.  It is a business marriage, and like with traditional marriage, it is important that there is a good match.  And like a pre-nup, a partnership agreement is important to have in place.   It outlines the agreement between the parties, serves as a roadmap for how each person will be involved in the business, and provides avenues to solve conflicts if they arise.

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