Where Should You Incorporate in the US?
Delaware vs Other States

If you ask most founders where they should incorporate in the United States, Delaware is usually the first answer. That makes sense. For decades, Delaware has been the default choice for many fast growing companies.

According to Delaware’s annual report (2024), 66.7% of Fortune 500 companies are incorporated in Delaware. That reputation creates a kind of autopilot effect, even for founders for whom Delaware is not necessarily the best option.

Delaware’s advantages are real, but they are built for specific situations, not for every business. If you operate in one state and you are not planning to raise capital, “default Delaware” can mean you end up paying for compliance in two states instead of one.

Why Delaware Became the Default

Delaware is popular for two main reasons.

1) Investors and VCs are set up for Delaware

US investors often use standard documentation aligned with Delaware corporate law. Many of these documents are based on models from the National Venture Capital Association (NVCA).

If you incorporate in another state, your attorney may need to adapt documents to a different state’s legal framework. That costs time and money, usually at the exact moment a funding round needs to move fast. In practice, investors often ask companies to move to Delaware later through a “reincorporation.”

2) A specialized corporate court

Delaware has a court designed specifically for corporate disputes, the Court of Chancery. Cases are typically handled by a judge (without a jury), which often leads to more predictability and speed.

Because Delaware has decades of case law on shareholder disputes, governance, and M&A, investors, attorneys, and buyers have a clearer sense of what to expect. That predictability is a major reason Delaware remains attractive for companies that care about certainty in corporate law.

Delaware is often the standard, but the best choice is the state that fits your operation, growth plan, and investment strategy.

The Downside: Delaware Is Not “Free”

Delaware works extremely well when you actually need its benefits. If you do not, you may be paying for extras you will not use.

Delaware charges annual fees even if you have no operations there. Corporations pay an annual franchise tax, and LLCs also have annual state fees. The exact amounts depend on your structure and the calculation method, but the principle is simple: you pay every year for the entity to exist.

And if your business is actually operating in another state, that state will usually require you to register there as a foreign entity, and you may owe taxes and annual fees there as well. So you are not choosing between Delaware and your operating state. In many cases, you end up paying both.

For a company operating in one state with no plans to raise venture capital, incorporating directly in the state where you operate is often the most efficient choice.

How to choose the right state (and avoid beginner mistakes)

The most common mistake is choosing a state based on reputation instead of what it practically delivers for your situation. It can feel harmless at the start, but later it can lead to double registrations, unnecessary annual obligations, or a restructuring at the exact moment you need speed.

At Van Holland Group, we guide founders through this decision every day. The goal is to get it right from the start, aligned with your operations, your growth plan, and any investment strategy, so you do not have to fix expensive mistakes later.

Use this order as a simple decision framework:

Where do you actually operate?
Where are your team, customers, inventory, office, and day to day activities? If most of this is concentrated in one state, that is usually your logical starting point.
Are you planning to raise money from US investors?
If you expect venture capital or other US investors, Delaware often becomes the default because it reduces friction in documentation and governance.
What is your priority?
Think about lower annual obligations, simpler compliance, investor expectations, or governance flexibility. No single state wins on everything.

Once your priorities are clear, the choice between Delaware and alternatives becomes much easier.

Delaware of een andere staat? Zo kies je de juiste incorporatie in de VS.

Texas and Florida are gaining ground

Delaware is still a strong choice for many companies, especially if you plan to raise capital from US investors. At the same time, other states are positioning themselves more actively as attractive alternatives, especially Texas and Florida.

Texas has been investing in a business friendly environment for years and is building more specialized legal infrastructure for business disputes. Florida benefits from strong growth, a business climate that appeals to many international founders, and an ecosystem that is maturing quickly in sectors like tech, trade, and services.

The core point remains the same: the best state is not the most popular one. It is the state that fits your operations, your growth plan, and your compliance preferences.

A Quick Note on “Macro” Headlines

Some articles mix incorporation decisions with macroeconomic news (for example, Federal Reserve interest rate updates). For choosing where to incorporate, that is usually less relevant than your operational footprint, your fundraising plans, and your compliance preferences.

Want to Make This Decision Clear for Your Situation?

If you are weighing Delaware against the state where you will actually operate, we can help you compare the options based on your plans, growth path, and compliance risk.

We are happy to assist you with personalized advice.

Schedule a TEAMS video call at your convenience
Contact us by phone (786) 233 6384
Or email: info@vanhollandgroup.com

FAQ – Frequently Asked Questions

& answers about Delaware vs other states (US incorporation)

1. Why do so many companies choose Delaware as their standard?

Delaware is popular because many investors and attorneys are familiar with Delaware structures and Delaware law. Additionally, Delaware has a specialized business court (Court of Chancery) with extensive case law, which provides predictability in corporate disputes.

2. Is Delaware always the best choice for my business?

No. Delaware is particularly advantageous if you want to raise capital quickly from American investors or if you expect a more complex shareholder structure. If your business predominantly operates in one state and you have no fundraising plans, incorporating in your operational state is often simpler and can help limit annual obligations.

3. What is the biggest beginner mistake when choosing an incorporation state?

Choosing based on reputation instead of your own situation. This can lead to duplicate registrations (Delaware plus your operational state), additional annual filings, and unnecessary fees. A choice that feels “standard” now may cause delays or extra work later on.

4. Do I pay extra if I incorporate in Delaware but operate elsewhere?

Often yes. Delaware has annual obligations (like franchise tax and filings). If you actually operate in another state, you usually need to register there as a foreign entity and may also owe annual obligations or taxes there. You don’t choose between Delaware or your operational state; you often pay both.

5. Why are Texas and Florida increasingly mentioned as alternatives?

Texas and Florida are gaining ground as they actively position themselves as business-friendly states. Texas is developing specialized courts for commercial disputes. Florida benefits from strong growth, an attractive business climate, and an ecosystem that is becoming increasingly relevant for international entrepreneurs.

6. How do I quickly determine which state best fits my plans?

Use this decision framework:

Where do you really operate? (team, customers, inventory, office, daily activities)
Are you raising money from American investors? (if so, Delaware is often the default)
What is your priority? (low annual obligations, compliance simplicity, investor expectations, governance flexibility)

Van Holland Group helps you make this choice practical by calculating and translating it into a structure that fits your operations and growth path, so you can avoid beginners’ mistakes.

04 Aug 2026

Where Should You Incorporate in the US? Delaware vs Other States