You’ve made that important step of deciding to incorporate your business. Now, how do you know which state you should incorporate in?
It’s not always an obvious answer. Some states have excellent business climates, few regulations, low taxes and incorporation fees.
But this is not the only thing to think about – incorporating in a business-friendly state may indeed end up costing you more in the end.
If the corporation is small and mainly doing business in one state, it’s advisable that you incorporate in that state since you will have to qualify as a foreign corporation otherwise. While the fees, regulations, and taxes may be much better in another state, you will still be subject to taxes in both the state of incorporation and your home state. If the corporation is larger and will operate in multiple states, then the question becomes more complex. You should always consult with a tax professional before making any final decisions.
For more information on deciding where to incorporate your small business, check out Which State should I incorporate in? in addition to other information resources on this subject contained in the MaxFilings Online Incorporation Knowledge Center.