In some U.S states, you don’t need to be a resident of a particular state to start a business in that state. Hence, it is a smart strategy to register your business in a business-friendly state. Some states offer benefits that others may not, hence the location where you register your company matters a lot.
Here, we have listed down America’s top three business-friendly states to help you decide the location to register your business according to your business needs and aspirations.
Wyoming offers several benefits for businesses that some other states do not. Major tax benefits are one of the top advantages that Wyoming provides, the sales tax is one of the lowest at 4%. Whether you are planning to start a corporation or an LLC, the greatest advantage is tax flexibility. Higher taxes can eat your business profits and slow down the growth.
Let’s look at tax advantages that corporations and LLCs can benefit from by choosing Wyoming:
- Personal Income Tax: Wyoming does not require you to pay personal income tax separately if you are a non-resident.
- Excise tax: State taxes on specific items like gas are not charged.
- Intangible Tax: You will not be taxed on intangible assets like stocks or bonds.
- Corporate Tax: Entity tax will not be charged from businesses in Wyoming. This helps in reducing the strain of double taxation.
The overall tax climate in Wyoming is considered one of the best because not only is there an absence of certain taxes but it also provides several exemptions for corporations and LLCs.
- Manufacturing sales tax exemption: If you choose to form a manufacturing startup company in Wyoming, then you can leverage the sales tax exemption relevant to sales or rent manufacturing machinery that could be used in Wyoming directly. This is especially beneficial if the machinery is to be used for tangible personal property like household items, computers, furniture, etc.
- Sales tax exemption on Electricity: You can benefit from the exemption on electricity or fuel directly consumed by your manufacturing process.
- Licensing and filing fees are not charged: Unlike other states, Wyoming does not charge filing or licensing fees for the incorporation process. Unlike other states where they charge you $125 filing fees, after 30 days of filing your incorporation, Wyoming does not charge any hidden fees post-filing. By this, your overall costs will be reduced. Also, the state renewal fee is $50, much less as compared to other states.
- Asset protection: You and your officers don’t have to fret about losing your home, car, or other assets, since corporations in Wyoming provide Asset protection against disgruntled clients and creditors with overzealous attorneys. Wyoming has the most stringent laws to protect LLCs and their assets.
- U.S citizenship not required: You do not need to be a U.S citizen to incorporate your business in the U.S.
- Privacy: Unlike other states, Wyoming does not require the manager of the LLC members to enter the public database. In simpler words, your private and personal data will not be made public. Furthermore, nominee officers are not needed to be listed, ensuring higher privacy. Your privacy is preserved and ensured when you incorporate your business in Wyoming.
- Easy to move: If you want to shift your already incorporated business to Wyoming, you needn’t worry because Wyoming is one of the states that allows moving.
The above reasons make Wyoming one of the best choices in the U.S to incorporate your business. It is one of the most business-friendly states for residents as well as a non-resident.
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There are many big brands incorporated in Delaware without having a physical presence in the state. Almost half of the fortune 500 companies and publicly traded companies situated in the U.S are incorporated in the U.S. There must be reasons as to why Delaware is so popular among businesses.
Benefits of incorporating in Delaware
Delaware offers a lot of flexibility when it comes to corporate and board structure this, makes it easier to set up your corporation. Moreover, your officers and directors need not live in the state to conduct business. Other states require at least three individuals as directors or officers but in Delaware, you can run your business solo.
- Unique Court System
Delaware’s Court of Chancery is the only equity court that has been devoted to business and corporate cases since 1972. Judges appointed by the elected officials serve 12-year terms and specialize in business law. They are specialists in the subject matter, and decisions are made more swiftly. In simpler terms, your case will be heard before a judge with expertise in corporate law and not a jury made or laypeople. You are more likely to go through a fair, impartial, and streamlined process in Delaware.
- Cheap filing fees
Filing fees and running costs for LLCs and corporations are relatively cheaper. The filing fee is only $90 for an LLC, and the annual tax is $300. Moreover, LLCs do not need to file any annual reports.
- Enhanced Privacy
Delaware does not require you to disclose information about your officers and directors when you form your business. Ownership and management information is also not made public. If privacy is your concern, then Delaware is your best option.
- Appealing to the investors
Many investors and banks prefer companies incorporated in Delaware. It is smart to start now and register your company in Delaware instead of having to shift when demanded by an investment banker or venture capitalist. Moreover, Delaware’s laws concerning security and management fulfill the expectations of professional investors making it a prime location for investors.
- Best for startups
If you are a new company looking to lure outside investment from venture capitalists, angels, and private equity, then Delaware is your best choice. Many investors look out for Delaware corporations, hence starting
- A literal tax
- Faster and easy to form
Delaware offers several choices for speed of filing, depending on your needs and budget. The five options are standard, 24-hour, same day, two-hour, and half-hour.
- Great for virtual and mobile companies:
Since the advent of cloud computing, easy file-sharing, and mobile internet, many companies have spread around the country or the world.
For high mobility, the best place to incorporate is in a jurisdiction where there are fewer entangling obligations, such as complex annual franchise tax reports to file.
Delaware is one the most popular places for incorporating business because of its business-friendly laws and is also called a tax haven.
Nevada is known to provide an optimum business environment because of its flexible business and tax laws.
Here are a few reasons why you should consider Nevada to incorporate your business.
- Flexible tax facilities
Personal and franchise taxes are not charged in Nevada. Nevada also offers many policies to reduce the burden of taxation by offering tax deferrals on capital purchases, according to the accrual accounting assumptions. In simpler words, business owners can pay the taxes on capital purchases in the future and relish the breaks on sales tax. There is no unitary tax, corporate tax, personal income tax, and franchise tax charged. Moreover, the minimum employer payroll tax is 0.63% of gross wages with reductions for employer-paid health insurance.
It is considered one of the freest economies in the world due to the government’s active participation in helping small business owners and not just big companies.
- Low cost of living
Unlike other U.S states, the prices of accommodation are not too high. The cost of living is ever rising in states like Boston and San Francisco, which can prove to be difficult for small business owners. In Nevada, prices don’t rise fast, which makes it a perfect location for startups and small companies starting new.
- Registration of foreign entity
You can incorporate your business in Nevada without living in the state or being psychically present.
- High privacy
If you’re looking for privacy and anonymity, then Nevada is your best option. Nevada corporate law allows for “nominee” director and officer that can further enhance confidentiality and privacy. A nominee director or officer is the one that stands in place of the “actual” owner of the corporation. Nominee directors and officers can be in the title for the public view. Whereas the real or actual controlling entity is kept confidential.
That means, unlike other states, you don’t have to list owner names to register your corporation.
- Business-friendly atmosphere
Nevada is one of the states that have the most business-friendly climate. Nevada is known to attract businesses, attracting some high-profile and hi-tech firms to set up their companies. This further invites investment opportunities.
- Asset protection
When you register your business in Nevada, any liabilities incurred by the business are kept with the company. Incorporation in any state protects you against most liability but, other states produce loopholes that can hold you responsible for the damages caused by your company. You are also not asked to list your company assets to the state and is only for the federal government. The anonymity protects and guards your privacy and assets when incorporating a business.
To conclude, Nevada is a business-friendly state with a low-regulation environment. Incorporating in Nevada will surely provide your business growth and development.
Review each location and research corporate laws of the states before deciding on a state to incorporate your business. Consider taxation policy, security, anonymity, and asset protection in all the three states mentioned above to make the best possible decision that fits your and your companies needs and aspirations.
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