If you ask 10 entrepreneurs in Silicon Valley where they’re incorporated, I bet you that 9/10 will say that they’re incorporated in Delaware. At LawTrades, we always get asked why attorneys recommend Delaware. Delaware is a completely random state but here’s why it’s a popular choice for entrepreneurs and investors.
Delaware is an easy state to incorporate in. The filing fee is only $89 which is very cheap compared to other states. Additionally, the turnaround time for filing is very quick, you can be up and running in just a few days. Finally, their customer support team is great. Most people hate dealing with government agencies but Delaware is actually quite easy to work with. The customer support team is very friendly, they’re open till 8:00 pm and they are very responsive to quick questions whenever you have them.
The laws in Delaware are friendly for founders and investors. Delaware is not as regulated as other states and we all know that business owners favor less regulation. Almost 1,000,000 businesses are incorporated in Delaware because of their flexible laws and their hands-off approach to corporate governance. The idea is that Delaware wants business owners to feel as if they’re not tied down by arbritrary laws or cumbersome formalities.
If there’s one thing that you should want to avoid, it’s litigation. Litigation is expensive and pretty stressful. If you don’t believe me, check out the second season of Silicon Valley and you’ll see why litigation sucks. Since Delaware has such a rich history of forming entities in their state they have a vast amount of precedence that judges can rely on. Since the courts in Delaware have handled thousands of disputes already and it’s easy for them to apply their previous rulings to existing conflicts. This helps create speedy resolutions.