So many new entrepreneurs want to get fancy with incorporating. They should stick to the basics and incorporate in their home state.

QUESTION.
I live in Kansas and am going to start a small business here. I think I want to form a corporation. I've heard that Delaware and Nevada are the two favored states in which to form a corporation. Do you recommend I form my corporation in either of those states rather than Kansas? Please advise.

ANSWER.
I recommend you form your corporation in Kansas. You could form it in Delaware or Nevada and have a registered agent accept process for you in the state where you incorporate. But you'd owe an annual fee to the agent and probably some registration fees annually to the state. You also would have to register your out-of-state corporation as a foreign corporation in Kansas. Seems like a lot of hassle for little benefit.

Corporations are creations of state law. The state law of the place a corporation is created is what applies to disputes a corporation may run into. Usually these disputes are between the corporation and its employees. Delaware and Nevada laws seem to favor the corporation instead of the employees. Therefore companies that have lots of employees may benefit from incorporating in Delaware or Nevada even though they don't do business there.

But your company is small and closely held. You have no need for the Delaware or Nevada legal systems. You'll be best off just filing in Kansas.

I hope my comments are helpful to you. Good luck! Regards, -Jeff

Jeff Lippincott
SCORE.org Counselor
Princeton, NJ
scoreprinceton @ aol.com
www.scoreprinceton.org
www.jlippin.com