Question

Many American businesses that use corporate structures choose to incorporate in Delaware even if they are physically based in another state. Legally, why might a business from, say, New York choose to be a Delaware corporation rather than just a New York Corporation? Explain.

Answer 1

Ans. There are many reasons for a business to be incorporate in Delaware :

1. Delaware's courts, tax systems, laws and policies have made it an attractive state for businesses to incorporate since 1900s.

2. Delaware's court of chancery allows the companies to resolve disputes quickly with a judge than a jury. And also the court of chancery are established only to hear business related cases.

3. Delaware's tax systems gives businesses several ways to legalally minimize their tax bills like company which is incorporated in Delaware but do business in other states don't have to pay state corporate income tax to delaware.

4. Delaware's laws and policies make it easy for the businesses to incorporate, avoid liabilities, and retain privacy. It makes convenient for the businesses to fill out incorporation paperwork in an hour.

5. Delaware has a reputation for being friendly with the businesses for a long time therefore businesses choose to incorporate in Delaware.