Of course, if cash is especially tight at the start, you could choose your home state even when you expect to move to Delaware soon – by then, the cost of reincorporating will be just a small part of your deal expenses. Don’t forget to make sure the name you use is available in Delaware; there are no guarantees it will stay available until you’re ready to move, but presumably you’d like to know if the name is already taken. And if you don’t think you’ll ever have investors pushing you to form your company in Delaware, you don’t need to do any of this math. Don’t feel compelled to go there.

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(1) These legal fee estimates are well on the low side, but not unheard of. They assume an absolutely off-the-shelf set of documentation with no special features to suit your situation.

So for a Massachusetts-based business, incorporating in Delaware costs nearly three times as much as incorporating at home. And each year it costs about twice as much to cover the annual fees and franchise taxes. Over time, these differences add up:

© 2014 by Robert G. Schwartz, Jr. All rights reserved Disclaimer: This summary is provided for educational and informational purposes only and is not legal advice. Any specific questions about these topics should be directed to an attorney.

Continued: Should You Form Your New Company in Delaware or Closer to Home?

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