Why do many people recommend incorporating in Delaware or Nevada ?
Most small businesses choose their home state to incorporate or the state they are doing business in. Delaware and Nevada have laws that protect corporation officers and directors from various litigation. Also, some other states have higher taxes on capitalization. However, if you incorporate in Delaware or Nevada, you will still be required to file and register as a foreign corporation with the Secretary of State in the state you are doing business. This will result in increased incorporating fees charged by your CPA. If you intend to maintain your business in only one state and do not anticipate going public or raising money through a private placement, then incorporate your company in the state you are doing business and forget about Delaware or Nevada for now!
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