Comments on: Delaware is Suffering: Will Incorporation Fees Increase? http://thestartuplawyer.com/incorporation/delaware-is-suffering-will-incorporation-fees-increase Startup Law, Incorporation, Convertible Notes, Preferred Stock, Stock Options, Venture Capital Fri, 12 Mar 2010 18:59:08 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Ryan Roberts http://thestartuplawyer.com/incorporation/delaware-is-suffering-will-incorporation-fees-increase/comment-page-1#comment-324 Ryan Roberts Tue, 27 Jan 2009 00:22:31 +0000 http://www.thestartuplawyer.com/?p=871#comment-324 @ Damon - I agree. It's kind of like how cereal boxes are now smaller. @ Mike - That's what I always loved about Delaware. They are very high tech when it comes to customer support (live chat) but you have to fax or mail in your certificate of incorporation. That is, of course, you use CT Corp or Blumberg. @ Damon – I agree. It’s kind of like how cereal boxes are now smaller.

@ Mike – That’s what I always loved about Delaware. They are very high tech when it comes to customer support (live chat) but you have to fax or mail in your certificate of incorporation. That is, of course, you use CT Corp or Blumberg.

]]> By: Mike http://thestartuplawyer.com/incorporation/delaware-is-suffering-will-incorporation-fees-increase/comment-page-1#comment-325 Mike Mon, 12 Jan 2009 02:20:29 +0000 http://www.thestartuplawyer.com/?p=871#comment-325 Delaware makes a lot of their revenue from incorporation fees. Plus, because of the arrangement Delaware has with registered agent companies, Delaware can file so many new entity formations with a very small staff. The registered agent companies enter the formations or other filings directly into Delaware's system and print good standings without anyone from the Delaware Secretary of State touching the document. Yes the Chancery Court is great for companies like Disney and other Fortune 500 companies but Delaware has to have that steady stream of small businesses that pay the one time incorporation fee and continue to pay the franchise tax of $75.00 annually. Then the small business has to hire a registered agent who might cut you a deal on the first year of their annual registered agent fee of $250.00 to $300.00 but after that first year you pay the full fee. What the small business usually doesn't realize is they still need to qualify in the state they are really conducting business in and they still have to file franchise tax reports and maybe pay franchise taxes. So why does a first year start up that is usually not going to bring in enough revenue to pay themselves a salary filing in Delaware? Are they going to fly into Philadelphia and take the train to Wilmington to litigate using the great laws of Delaware? Unfortunately, too many businesses incorporate in Delaware and find out it really costs more than if they would have paid the $300.00 in Texas in the first place. Delaware makes a lot of their revenue from incorporation fees. Plus, because of the arrangement Delaware has with registered agent companies, Delaware can file so many new entity formations with a very small staff. The registered agent companies enter the formations or other filings directly into Delaware’s system and print good standings without anyone from the Delaware Secretary of State touching the document. Yes the Chancery Court is great for companies like Disney and other Fortune 500 companies but Delaware has to have that steady stream of small businesses that pay the one time incorporation fee and continue to pay the franchise tax of $75.00 annually. Then the small business has to hire a registered agent who might cut you a deal on the first year of their annual registered agent fee of $250.00 to $300.00 but after that first year you pay the full fee. What the small business usually doesn’t realize is they still need to qualify in the state they are really conducting business in and they still have to file franchise tax reports and maybe pay franchise taxes. So why does a first year start up that is usually not going to bring in enough revenue to pay themselves a salary filing in Delaware? Are they going to fly into Philadelphia and take the train to Wilmington to litigate using the great laws of Delaware? Unfortunately, too many businesses incorporate in Delaware and find out it really costs more than if they would have paid the $300.00 in Texas in the first place.

]]> By: Damon http://thestartuplawyer.com/incorporation/delaware-is-suffering-will-incorporation-fees-increase/comment-page-1#comment-326 Damon Fri, 09 Jan 2009 16:32:15 +0000 http://www.thestartuplawyer.com/?p=871#comment-326 Delaware just raised it's minimum franchise tax to $75 (plus a filing fee of $25). Not sure how much that matters in the big picture, but it's a way to get more money without discouraging new companies. Delaware just raised it’s minimum franchise tax to $75 (plus a filing fee of $25). Not sure how much that matters in the big picture, but it’s a way to get more money without discouraging new companies.

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