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: The Startup LawyerDelaware is Suffering: Will Incorporation Fees Increase?
By Ryan Roberts
I’ve blogged before about the benefits of incorporating in Delaware. Thus, I was somewhat shocked to see the Deal Journal blog about how Delaware is becoming another victim of the credit crunch. I never thought about how much revenue Delaware receives from its Division of Corporations, but the article contained this statistic:
Delaware?s Division of Corporations contributed $700.8 million in revenue to the state in fiscal 2007. That was about 22% of the state?s total revenue.
According to Mark Roe, a Harvard Law Professor interviewed in the Deal Journal article, most of the Division of Corporations revenue comes from corporate franchise tax fees:
The current situation is that Delaware?s corporate tax base is eroding. On Delaware, it can have a big effect because Delaware gets about one-sixth to one-quarter of its state budget from corporate franchise fees.
Thus, If I’m reading the article correctly, Delaware doesn’t take in a lot of revenue from new incorporation fees. Delaware’s incorporation fees vary (click here for Delaware’s corporate fee schedule), but usually fall well below states like Texas which charges $300 for a new LLC or corporation. So will Delaware raise its incorporation fees to help make up the decreased Division of Corporations tax revenue?
The problem with raising incorporation fees is that Delaware needs to attract new filings, especially from out-of-state businesses. Raising incorporation fees would obviously not be a step in that direction. But it may be a better alternative, at least politically, than raising the state sales or corporate income tax.
And even if Delaware doubled or tripled its new incorporation fees, it wouldn’t affect a potential recommendation whether new startup company should incorporate in Delaware.
Full post as published by The Startup Lawyer on January 08, 2009 (boomark / email).
Supreme Court Allows Fees to Out-of-State Litigant in Class Action Settlement
Alaska Electrical Pension Fund v. Brown, et al., (Del. Supr., Dec. 21, 2007), read opinion here. The best summary of this Delaware Supreme Court decision is supplied by the Court in the introductory paragraphs of its opinion:"[The Court decides] ...
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I recently received an email notification announcing a new service offered by a popular online incorporation and document filing service. For $75, they will email you the appropriate business license forms for you to complete and file...
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Effective July 1, 2008, the filing fees, search fees and copy fees will increase for Florida Circuit, County and Appellate Courts. The fee increase is part of Senate Bill 1790 which is awaiting the governor's signature...
Should You Incorporate Your New Michigan Business in Delaware or Nevada
Occasionally I am asked by clients if it might be advisable for them to incorporate their new business in some exotic locale such as Delaware or Nevada. Some of these clients have heard that many large Fortune 500 type businesses were incorporated in Delaware, even though their headquarters and principal places of business are located elsewhere...
CA v. AFSCME and Delawares Dominance
One explanation for Delaware’s status as the leading locus of incorporation for public corporations and, hence, as the dominant force in corporate law is that the state offers a rich body of precedent developed by a highly expert judiciary capable of resolving time sensitive business disputes in a very rapid manner...
Briefs on Whether the Second Amendment Should Apply to the States Via the Fourteenth:
This is the "incorporation" question, and it's raised in Nordyke v. King, a case now pending before the Ninth Circuit; the pro-incorporation and the anti-incorporation briefs are now both...
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