Form a company in Delaware?
In some U.S. states, taxation is very favorable for businesses. This is particularly true of Delaware, Nevada, and Florida. Every year, many entrepreneurs decide to set up a company in Delaware to benefit from the state's favorable tax system, which can be considered a true tax haven in the USA.
However, is setting up a business in Delaware a good idea? Aren't some southern states, such as Florida, safer for entrepreneurs seeking an attractive tax system for their company?
Why does the state of Delaware have such a bad reputation?
An image of a tax haven
There are nearly 950,000 companies registered in the state of Delaware in the USA: this figure is very surprising when you consider that the state has just under 900,000 inhabitants...
Delaware, farther north and close to Maryland and Pennsylvania, is often used by Americans for tax and legal optimization within the USA. It is a mistake to promote this state to non-residents because Delaware does not offer economic substance (only PO boxes for domiciling companies, which makes it very difficult to open a bank account there). The tax authorities of OECD countries no longer want “offshore” companies, in the sense of companies that are “non-resident” (no office and no local staff). The OECD does not like the concept of a tax haven.
Transparency and reputation
Some emphasize that there is no company registry on the national territory (only the Registered Agent holds this information). This argument seems illusory to us, since annual tax returns concerning the shareholders must be filed, and the USA does not allow its national legal and banking system to be used to defraud a foreign tax authority.
We therefore strongly advise against incorporating a company in Delaware (located near Pennsylvania) because of its poor reputation and to avoid any risk of tax evasion.
Why is it better to establish your company in Florida rather than in Delaware?
Florida, like Delaware, has no income tax.
The 2 main differences from Delaware are:
A physical address
A company in Florida has a physical address, allowing it to open a local bank account;
A good image
A company in Florida enjoys a good reputation (unlike Delaware's "tax haven" image).
A company in Florida costs more than a company in Delaware, but this difference buys you peace of mind regarding banking and taxes!
Feel free to contact us to confirm that Florida meets your needs.