Next best to incorporate other than Delaware?
I wish this was more of Ask YC / VC. I have been told it is either Nevada, Wyoming and Texas. Considering Stripe Atlas dont support anything other than Delaware. Does anyone have any Pros and Cons or recommendation.
I can understand the reasons for wanting to incorporate in a state other than Delaware, but I think it's one of those things where if you have to ask on HN, the right answer is still Delaware (assuming you want to raise funds with equity).
It's not just Stripe Atlas, the rest of the American venture economy (service providers, accountants, etc.) is well-lubricated around Delaware C Corps.
Having involuntarily engaged in some litigation in Nevada, I can tell you it can be literally and metaphorically the Wild West. To paraphrase the local attorney: "Nevada has one small shelf of case law precedents -- so the judge can do pretty much whatever they want. And judges are elected, so they'll probably do what gets them re-elected."
What my corporations professor said in law school was that if you were going to be a large public company incorporate in Delaware. For nearly anyone else incorporate in the state where your business is located.
That was before the development of the current VC funded tech startup culture, so that probably needs to be modified to say something about incorporating where the people who are giving you the money tell you to.
Start Your Own Corporation (Garrett Sutton, 2012) https://www.amazon.com/gp/product/1937832007/ . Big focus on "charging order protection" - if you are sued and lose, states like Wyoming with charging order protection mean that you have to give up future profits of your company, but you are not forced to do anything to actually generate future profits. This also means that lawyers won't get paid as easily for lawsuits, since they aren't sure if/when they can actually get money from the proceeds, which may make lawsuits less likely.
Many good points here in the thread. If you need to raise equity, DE might be okay. I believe Ycombinator insists on Delaware. If you live outside of the US, DE may also be a good option. Otherwise, just incorporate where you live if you don't have reasons not to do it.
They are pretty solid for incorporation: https://www.northwestregisteredagent.com/
Why Stripe? This payment solution only accepts DE companies? Why?
I had a Nevada LLC when I lived in Las Vegas, which was great up until around 2020, when the state seemed to just stop processing paperwork and the Secretary of State website started going down for ~6 hours/day. They then introduced an CAPTCHA that was impossible to solve any time I tried.
To re-domesticate the LLC in South Dakota (where I live now), I had to manually mail in the paperwork, which then took them several months to process.
It's possible this was pandemic-related stupidness and they've since gotten their act together, but based on my experience I can't recommend incorporating there.
I am not a lawyer, and you should consult one if you're not sure. My personal rule of thumb, which you shouldn't take as legal advice:
Basically anyone who I would want to give me money or to buy the company will require that the company be registered in Delaware.
If it's just a legal entity for personal protection, and I don't expect anyone else to be involved, it's cheaper for me to just use my home state.
Why don’t you want to incorporate in Delaware?
This is a hugely contingent decision. I would advise working with professionals for your specific needs, or at least specifying your needs as much as possible.
SpaceX moved from Delaware to Texas earlier this year
Those are the choices I’d make. I live in Texas and my friends are incorporated in Wyoming.
Thank You for all the answers. Dont know why this falls off the front page so quickly.
Nevada is fairly business-friendly. (I have a business in NV.)
You are right to avoid Delaware, after the judicial activism with Elon Musk.
Elon moved to Texas, which may have been because he has a launch base there.
Wyoming does not have a lot of infrastructure, but if your business doesn't need that, it may be your best choice.
The answer, of course, is Delaware.
It literally doesn't matter as long as it's in the US.