Incorporate Out of State? Oregon

One of the first questions you're likely to face when you decide to incorporate iswhere to locate your corporation.

Local Companies

Aba
(503) 723-7954
1800 Blankenship Rd
West Linn, OR
Reed Company the
(503) 570-1000
PO Box 2777
Wilsonville, OR
J & B Management Group
(503) 715-3377
325 NW 21st Ave Ste 100
Portland, OR
NW Management System Inc
(503) 681-8957
Hillsboro, OR
Dpi
(541) 902-0339
1569 9th
Florence, OR
Smoke Management
(541) 534-6625
Imbler, OR
Social Ecology Associates
(541) 488-6978
163 Beacon Hill Dr
Ashland, OR
Management Center For Organizational Effectiveness Inc
(541) 779-3910
10 Crater Lake Ave
Medford, OR
Armstrong & Associates
(541) 956-6341
223 NE B St
Grants Pass, OR
Executive Advisory Institute
(503) 595-8373
1825 NE Broadway St
Portland, OR



One of the first questions you're likely to face when you decide to incorporate is where to locate your corporation. You are not required to incorporate your business in the state where you're based; you can choose from any of the 50 states or the District of Columbia. However, in almost all cases, it is advisable for a closely-held small business to incorporate in its home state.

Several states -- most notably Delaware, Nevada and Wyoming -- are considered to be the most corporate-friendly because of their liberal incorporation laws and favorable taxes. Delaware, for instance, is the home of more than half of the corporations listed on the New York Stock Exchange because of the flexibility and protection it offers larger companies. Many of these benefits, however, are not applicable to small businesses, and most states now have corporate statutory protection comparable to Delaware's. Nevada, meanwhile, actively encourages out of state firms to incorporate there by having no corporate income tax on profits, no state annual franchise tax, and no personal income tax.

Even with these benefits, it can be more expensive and more of a hassle for you to incorporate your small business out of state. A careful analysis of the pros and cons can point this out. Some of the issues you need to consider include:
  • Having a local presence

    You need to have a local presence in the state you incorporate in. If you don't have a physical presence in that state, you will have to hire and pay a registered agent. An agent acts as your legal representative in that state, and is authorized by you to make certain legal decisions. Be sure to build these fees into your analysis.
  • Taxes and fees

    Cost these out carefully, because the benefits are not always what they seem at first. You will have to pay the annual franchise fee in the state where you incorporate, but that may not exempt you from paying fees in your true home state. To do business in your true home state, you may have to register as a "foreign corporation" -- which gives you the authority to transact business in that state -- and still pay franchise fees as well as income taxes. This can take away the advantage of incorporating in a state with low or no corporate income tax.
  • Legal issues

    It may pay for you to run a careful analysis of the advantages and disadvantages of each state's laws and tax structure as they relate to the needs of your business. In addition, should you be sued, you may have to hire legal counsel and defend yourself in the state where you are incorporated.

    As with any legal decision, it may pay to seek the advice of your CPA or attorney. These advisors will be able to help compare the benefits of out-of-state vs. in-state incorporation, and assist you in making a decision that will best meet the needs of your company.

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