If I incorporate in Delaware, and locate my business in Texas would be a tax problem?

Question

Im looking to incorporate a business and I saw that Delaware or Nevada is very recomendable for tax and legal issues. But if I live in Texas; do I have to register the co. as a Foreign corporation? Will I loose the benefits I can have incorporating in Delaware or Nevada registering as a Foreign Corporation in Texas? Thanks

Answer 1

Yes, if the business is located in Texas you must register as a foreign corporation and be subject to the same laws and taxes as if you were a Texas corp. As you describe, this reduces the benefits of registering in Delaware, becuase of the additional costs and hoops. Save yourself the expense and just incorporate in Texas or locate the business in Delaware.

Good Luck,
Dana B.

Answer 2

In order to get protection from the Texas courts and to be recognized as an entity that can use the Texas legal system, you need to be recognized by the state of Texas. To do that, you must be registered as a Foreign Corporation.

You will find that a Foreign Corporation costs more to set up in Texas than a Domestic corp.

Unless you are a large corporation, you probably don;t want to set up as a Delaware corporation because you won't be needing the DE courts in your regular buisness operations.

A NV corp's advantages are that officers can be anonymous (not part of a public record), and there are no NV corp taxes unless you are in the gambling business. The disadvantage is that you have to pay someone to be your agent who resides in NV and you still have to pay an annual fee.

A Darn Good Tax Advisor (in Texas)

Answer 3

(1) Yes, most likely.
(2) No. Realize that most of the largest businesses in this country are Delaware corps, even if their home office is somewhere other than Delaware. You still have to pay Texas taxes if you earn income in Texas, but there are other advantages to Delaware (courts have to apply Delaware law when dealing with corporate issues, which is sometimes business friendly and more settled than law of individual states, the Delaware courts have set up special business courts that have expertise and rule very quickly, etc...) But if you're a small business the business rules in your home state might actually be more favorable than Delaware law. I understand that Nevada is a good choice because corporate registration fees are cheap. I would talk with a good accountant and corporate/tax attorney to evaluate your options.

Answer 4

Unless the company is going to be vary large, go ahead and incorporate in your home state.

Answer 5

No.