Do I need to form a Delaware or Nevada corporation?
Most small business should create corporations in the state where they’re based. This is because a “foreign” corporation – one from a state outside your home state – must be authorized to do business in your home state. To be authorized it must file papers with the state and pay filing fees. Most often those fees are as much as the fees to form a corporation. Therefore, you pay twice to form the corporation.
You might ask why, then, are large corporations Delaware corporations? And why do some people suggest Nevada corporations?
Delaware’s corporate laws tend to favor "mangement" (the board of directors) and enable the board to more effectively control the corporation. This isn’t important to you as a small business owner because you usually already have control. If you’re the only shareholder, you have complete control. If you’re one of a few shareholders, you should have a shareholders’ agreement to control management of the corporation.
Nevada corporations are touted for their secrecy provisions. Its my opinion that you should go offshore if you want secrecy. Further, secrecy with a Nevada corporation is usually a myth for small business owners. Unless you’ll have an agent who’ll act by and for the corporation, someone is going to know you’re an employee, officer or director. They’ll probably assume you’re a shareholder as well.