There are certain advantages to incorporating in the state of Delaware, but many of these advantages are lost to corporations that intend carrying on business in California.

You do not have to be in business in the state of Delaware to be registered there. However, if you carry on business in the State of California, you will still have to pay the usual California corporate tax, because your Delaware corporation must be registered in California.

The Corporate Franchise Tax can be as low as $60 (USD), in Delaware but if the corporation is doing business in California you still must pay the California Franchise Board.

The state of Delaware claims to be pro-business, because many business and corporate issues are decided by their Chancery Court, which reaches decisions without jury trial. The judges also concentrate on business law so they are more familiar with business issues.

It is necessary to have a registered agent in Delaware.

Other reasons to incorporate in Delaware:

• Shareholders can act in writing without the need to hold meetings. People who are not shareholders may serve on the Board of Directors.

• Notwithstanding the number of shareholders, one person can act as the only officer and director of the corporation. Note: In California, the same is possible if there is one shareholder.

• There is no Sales or Personal Property Tax in Delaware.

• If you wonder why so many banks are registered in Delaware, it is because that state has given them a wide birth on the interest rates that they may charge. So if your interest rate is sky high, you can be sure the corporation is registered in Delaware.

• Before insisting on setting up a Delaware corporation, it is a good idea to refer to legal counsel to determine whether there is a real benefit for you in having a Delaware corporation doing business in California.