Incorporating in Deleware vs. Texas
I have an LLC now but will probably be converting to a C Corp in the near future. I know that incorporating in Deleware used to be beneficial, but is that still true today? For example, does the extra privacy offered in Deleware really matter if you have to disclose the information in Texas? Maybe that’s not entirely accurate, but it’s something I’ve heard a lot. I’m just wondering if the extra expense and hassle of incorporating in Deleware is really worth it these days, or is everyone doing it just because that’s the way it’s always been done. Thanks!
The value of incorporating in Delaware, aside from privacy protections (which do exist for properly-formed, Texas-based entities), is the robust amount of legal precedents established in their courts. When you’re facing an expensive enough potential award, it’s easier to “crunch numbers” and determine whether it’s cost-effective to fight a legal battle. However, being formed in a particular state doesn’t automatically mean that lawsuits can or will be fought in that state. State regulations, your business practices, and contracts determine forum.
Startup & Tech lawyer @ txhq.org
