The Best State to Register Your Business
The results are in! If you are a Pennsylvania entrepreneur, it may surprise you to learn that
the best state to register your business is usually your home
state.
Harbor assists entrepreneurs with registering their business entities across state and federal
agencies.
So... Not Delaware?
It is often said that Delaware is the best state to incorporate. However the increase in annual fees and the hefty corporate franchise tax have detracted from the desirability of Delaware. More recently, states like Nevada and Wyoming have become popular choices for domestication of businesses.
The case for registering in your home state
It is best for most business owners to establish their businesses in their home states. Few entrepreneurs will be starting a business and will be looking to attract large amounts of investment capital. Investors are most familiar with Delaware and may insist on that state. However this is not the case for the vast majority of businesses. Registering a business in a different state necessitates multiple state registrations. If you incorporate in Delaware but own or lease property, solicit sales, or have resident employees in Pennsylvania, you will have tax nexus and will be required to pay income and/or sales tax in Pennsylvania. This also means that you will need to register your business in Pennsylvania and thus will have to maintain two business entities and pay the costs of doing that including applicable annual fees for both states.
Perks of Registering Your Business in Pennsylvania
There are many good reasons to incorporate in Pennsylvania.
Low cost to incorporate
The cost to incorporate in Pennsylvania is among the lowest in terms of filing fees assessed by the Department of State.
No annual report filing requirement
Pennsylvania is one of the few states that does not have an annual report requirement for most businesses. Instead, there is a decennial report. This saves businesses owners from annual fees that are as high as hundreds of dollars in some states. There are three exceptions: restricted professional LLCs, limited liability partnerships, and nonprofit corporations.
Relatively efficient Department of State
The Pennsylvania Department of State is one of the easier state departments to work with. Typically the turnaround time for processing business documents is 7-10 days. California, for instance, takes 3-4 months to process documents delivered by mail or in person.
