Why Indians Choose Delaware for U.S. Incorporation?

Why do Indians prefer Delaware for U.S. incorporation? Learn about Delaware’s tax benefits, business-friendly laws, fast setup, and investor appeal.

Indians choose Delaware for U.S. incorporation primarily due to its business-friendly legal framework, including a specialized Court of Chancery, and favorable tax advantages like no state corporate income tax for out-of-state businesses.

Delaware also offers a fast and simple incorporation process, allowing for same-day formation and flexible ownership structures, along with a reputation for investor-friendly policies and established corporate law

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Introduction:

1. Delaware has been the most popular jurisdiction in the U.S. for incorporating businesses not just for Indians, but globally.

2. For Indian entrepreneurs and companies expanding into the U.S., Delaware is often the default choice because of a mix of legal, tax, and practical reasons.

Reasons for the popularity of Delaware:

1. Business-Friendly Legal System
Delaware has a specialized Court of Chancery that deals only with corporate disputes.

2. Judges (not juries) handle business cases, which means faster, more predictable, and business-oriented rulings.

3. Corporate law in Delaware is highly developed and stable, reducing legal uncertainty.

Tax Advantages

1. No state corporate income tax on businesses that do not operate in Delaware (i.e., if your business operates elsewhere in the U.S. or globally, you don’t pay Delaware corporate tax).

2. No VAT or sales tax at the state level.

3. Franchise tax applies, but for most startups it’s nominal compared to potential savings.

4. If you’re not a tax resident of Delaware (i.e., you don’t live there), you don’t pay personal tax to Delaware. However Federal taxes may still be applicable to those having a green card.

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Ease of Incorporation

1. Delaware allows fast incorporation, you can get a company set up within hours.

2. The process is simple, and there is no need for shareholders or directors to be U.S. residents. This is particularly helpful for Indian promoters.

No residency requirement:

1. There is no residency requirement. So, an Indian can get his company registered by sitting in India.

2. Only an agent has to be appointed, who is required to have a Delaware address.

Gateway for Global Business

1. For Indian companies wanting to expand in the U.S. or raise U.S. capital, Delaware gives them a much required global structure.

2. Many Indian founders set up a Delaware entity, which in turn owns the Indian subsidiary this “flipping” structure makes them more attractive to U.S. investors.