“Where do I incorporate?” is a question that our incorporation specialists answer on a daily basis – and it’s a very good question to ask.
The fastest answer is “it depends.” When you’re deciding to incorporate your business, there are many things for you to consider. We’ve compiled these 3 important questions for you to ask yourself when deciding what state is best for incorporating your business.
- Where will you be conducting business?
We recommend incorporating your business in the state where you will be handling the majority of your business transactions. For example, if you live in Connecticut and will be conducting your business primarily in Connecticut, we would suggest Connecticut as your state of incorporation. Keep in mind that this is not a requirement, but is highly recommended to avoid any possible complications.
- Where do you plan on opening your business bank account?
Some banks may require that your business be incorporated or qualified (defined here) in that bank’s state. So, if you’ve incorporated your business in Texas, but you try to open the bank account in Oklahoma, your bank may deny your request to open a business bank account. This is not always the case. It is best to review this with your bank of choice prior to incorporation. Try asking them if they require you to be incorporated or formed in that state in order to open a bank account.
- Are you familiar with the desired state of incorporation’s annual compliance requirements?
Nearly every state requires corporation and LLCs to pay a variation of an annual fee in order to keep your company in good standing. The name of this fee varies by state, but may be referred to as “Annual Report,” “Franchise Tax,” or “Annual Registration.” The following components of the annual compliance may vary as follows:
Price. Some states have annual fees as low as $9, while others can reach upwards of $500.
Due Date. Certain states only require you to file once every 2 years, while others require a yearly filing. You’ll find that the actual due date can vary from a specific date or month, to simply the anniversary of the company’s incorporation.
Filing Options. Many states are offering online filing options, but some states still require reports to be sent in through mail.
Our State Specific Information section is a great resource to find thorough information regarding incorporation requirements and annual report information. If you do your research and ask the necessary questions, you’ll successfully incorporate your business in your state of choice. These inspirational articles are great examples of entrepreneurial success across the nation:
John Pepper’s Boston Burrito Empire
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Don’t hesitate to ask any questions or share your incorporation success story!