Generally, the home state where the corporation or LLC will conduct its business is the best choice. The “home” state will almost certainly have jurisdiction over your corporation even if you incorporate somewhere else. If you choose to incorporate somewhere other than your home state, this will likely require your corporation to qualify to do business (a separate filing with a separate fee) in your home state. You may also be required to file annual reports, pay annual fees, comply with the business licensing requirements, file tax returns and so on in both states.

Choosing another state will also subject your corporation to the jurisdiction of the courts and governments of both states. For example, if you are doing business in Florida but file as a Delaware corporation, the corporation could be sued in either state. It could be subjected to collection actions, tax deficiencies, lawsuits or administrative actions in either state.

So why do so many online incorporation services file only in Delaware or Nevada? Historically, Delaware’s corporation laws favored management and allowed greater flexibility. This was particularly important to large, multinational corporations with large numbers of shareholders. The Delaware laws are no longer much different from many other states.

Nevada touts itself as the only state without a sharing agreement with the IRS. Its also has no state tax. Certain businesses, such as holding companies, internet companies or offshore activities, may benefit. Unfortunately, many incorporation companies treat Nevada incorporation as little more than a tax or creditor evasion scheme. Do not be misled. There is no shelter for wrongdoing by filing a Nevada incorporation.

IIf you are considering a Delaware or Nevada business incorporation service, you may want to read further in our “Why Incorporate in Nevada?” and “Why Incorporate in Delaware?" sections.