Thursday, March 3, 2011


An oft asked question is whether it is more favorable for an entity to incorporate or organize in Nevada or Delaware. Global Business Lawyers recommends Nevada as the state of incorporation to all of its clients. One reason Nevada is so favorable and, in this instance, preferable to Delaware is the favorable corporate tax climate in Nevada. One such example is the franchise tax. A franchise tax is a tax imposed upon an entity by its state of incorporation for the privilege of incorporating or organizing within that state. In Delaware, the franchise tax imposed upon Delaware corporations is calculated upon the number of shares of stock the corporation has authorized to be issued. Alternatively, the Delaware franchise tax can be calculated upon a reported combination of total issued shares and total gross assets of the company. In either case, the annual franchise tax imposed by the State of Delaware upon Delaware corporations could be as high as $165,000.00.
In Nevada, there simply is no franchise tax - period. Another issue raised by this distinction between Nevada and Delaware is that in Delaware, in order to report and pay the franchise tax, a Delaware corporation must publicly disclose and report its number of authorized shares, issued shares and total gross assets. In contrast, Nevada requires no such reporting, thereby allowing Nevada corporations to keep their business and corporate information internal and private.

Disclaimer: This web site is designed for general information only. The information presented at this site should not be construed to be formal legal advice nor the formation of a lawyer/client relationship. If you have questions or need specific advice relating to the matters contained herein, please contact Lovaas & Lehtinen, P.C.

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