The best US state to start a business?

[Master77]

Dear friends,
I have a question about starting a new project. I want to open startup and attract an investor in my business. I hear that the best state is Delaware? How much money do I need to open the company that there would be an opportunity to attract an investor through shares?
Thank you

 

[djbaxter]

I want to open startup and attract an investor in my business. I hear that the best state is Delaware?

Where did you hear or read that comment about Delaware? I'm not saying you're wrong but I must admit it surprises me.

How much money do I need to open the company that there would be an opportunity to attract an investor through shares?

That seems to me to be a very broad question that is likely to invite very broad, general, and/or generic replies. I suspect you're going to need to narrow it down a bit...

 

[Edvin]

I hear that the best state is Delaware?

Where did you hear or read that comment about Delaware?

Delaware has a long history of having corporation-friendly laws. Because of the predictable legislation, it makes it easier for to avoid long judicial processes by predicting the outcome; thus, making it attractive for the investors. For many investors, moving corporation to Delaware is a requirement.

I'm no expert; but, I'm in process of incorporating for my small business and wanted to share my findings.

If you incorporate in Delaware; then, you will need a Delaware address with respective registered agent. You can find online services that provide such service and relay your mail with a suite address; but, I cannot comment on quality and logistics of such services.
You will also need to file foreign corporation for your state and pay respective fees.
If you bypass professional services, the total cost is probably in low hundreds.

While incorporating you may already know that a common number of shares might be about 1500 at $0.01 per share; however, it is a good idea to start with 10,000,000 shares, and you'll need to specify a respective par value per share. Next you must choose between valuation of par-value for each share and the tax that you will pay.
If you are confident that you can attract serious investors, then you can set your valuation immediately and sell shares accordingly. Otherwise, keeping the par value low (i.e. $0.000001) will reduce your taxable expense.

As the above link shared, amending articles of incorporation are not uncommon; so, you can defer decision to a later date.

 

[Master77]

Dear Edvin,
Thank you for your advice, it is really helpful. I want to Incorporate in Delaware, but my startup have low money, maybe you know how much money do I need to open it?
And how much money I need to keep the company a year without income if everything is bad?

 

[Edvin]

...maybe you know how much money do I need to open it?
And how much money I need to keep the company a year without income if everything is bad?

I can tell you about my upcoming expense in California...
Incorporating is $100. I also need to file statement of information within 90 days for about $25. Additionally, I will register Fictous Name or Doing-Business-Ad (DBA) for another $25 to remove the Corp suffix on my marketing assets. Lastly, I need to pay minimum of $800 franchise tax fee per year, which in California is waved during the first year. For out of state business you can expect to pay about another couple hundred dollars more for foreign business and local agent service.
If you are planning to operate without income and will not be operating in multiple states, then the most cost effective strategy is to incorporate in your local state. This statement is true even if you consider other states like Nevada with lower interest rates.
Remember, you can always move the corporation and amend the shares when there is interest from investors, which they already know that. If you have a sound product/service, your relocation is simply a logistical administration of low hundred dollars (or low thousand if done by lawyers); thus, I suggest keeping things local for simplicity and initial cost.

 

[Master77]

Maybe there is manual, how to create a corporate. Simple 5 steps?

 

[Master77]

I can tell you about my upcoming expense in California...
Incorporating is $100. I also need to file statement of information within 90 days for about $25. Additionally, I will register Fictous Name or Doing-Business-Ad (DBA) for another $25 to remove the Corp suffix on my marketing assets. Lastly, I need to pay minimum of $800 franchise tax fee per year, which in California is waved during the first year. For out of state business you can expect to pay about another couple hundred dollars more for foreign business and local agent service.
If you are planning to operate without income and will not be operating in multiple states, then the most cost effective strategy is to incorporate in your local state. This statement is true even if you consider other states like Nevada with lower interest rates.
Remember, you can always move the corporation and amend the shares when there is interest from investors, which they already know that. If you have a sound product/service, your relocation is simply a logistical administration of low hundred dollars (or low thousand if done by lawyers); thus, I suggest keeping things local for simplicity and initial cost.

My business is connected with the sale of exclusive and expensive luxury goods. The check starts from 1 million dollars and more. profitability of its 30 percent. But I have a very bad website. And a bad marketing.... But my goods really good. Id like to buy it myself. I want to find people who want to make business with me, but now it is only a startup and I don't have money for it....Maybe it was some business Angels? Or it is a stupid idea...

 

[Edvin]

Maybe there is manual, how to create a corporate. Simple 5 steps?

Here are my incorporation steps

But my goods really good. Id like to buy it myself

The real estate agent doesn't own the homes. The car/boat dealerships don't own the vehicles. As a matter of fact, some car dealership "borrow" vehicles from each other just to fill their lots; when they sell the vehicle they keep their markup and pay respective dealer.
Maybe you can find an alternative way of selling the good. Contact the supplier and initiate a conversation.

 

[Master77]

Here are my incorporation steps


The real estate agent doesn't own the homes. The car/boat dealerships don't own the vehicles. As a matter of fact, some car dealership "borrow" vehicles from each other just to fill their lots; when they sell the vehicle they keep their markup and pay respective dealer.
Maybe you can find an alternative way of selling the good. Contact the supplier and initiate a conversation.

Thank you, Edvin, your advice really helpful.
But still, what do you think, what the best state to open a business? )))

 

[Edvin]

But still, what do you think, what the best state to open a business? )))

I have the same struggles as you do; that is, maximize my effort/time/money.
I'm not an accountant/attorney...for your situation, it is my opinion that your local state, Florida, is the best choice. The rational to move to another state will make itself apparent when the need arises in the future.
You are not going to lose business, investors, money or other future opportunities because of this decision.