Where Is a Corporation Domiciled?

By Kay Lee

One of the biggest decisions when starting a business is to decide where the corporation will be incorporated. This decision determines the state laws that govern the corporation, which in turn shape the rights of the shareholders, board of directors and corporate officers as well as the rights and remedies relating to creditors. Finally, the choice of where to incorporate will determine the amount of state taxes paid by the corporation, and state tax rates vary greatly. The state of incorporation is the domicile of the corporation.

State of Incorporation

Incorporation is the process by which a corporation is recognized as a separate legal entity under state law. To incorporate, the founders must draft articles of incorporation and file those with the relevant state agency – often the commerce department or Secretary of State – and pay any required filing fees. The corporation is then recognized by the state. The newly formed corporation must have an initial meeting in which bylaws are adopted and stock is issued, if applicable. Directors can also be elected at the initial meeting, unless they are named in the articles of incorporation.

Operation in Multiple States

Just because a corporation is domiciled in a particular state does not limit it to operating in only that state. For a corporation to operate in a state other than its home state, the corporation must follow the other state’s protocol to register as a “foreign” corporation that is doing business within that state. Typically, this registration involves filling out forms and providing copies of the corporation’s articles of incorporation and a certificate of good corporate standing from the home state. Most states charge a registration fee for foreign corporations.

Ready to incorporate your business? Get Started Now

Changing Domicile

If a company wishes to change its domicile, it is not an easy process. The company will need to follow internal procedures to make this decision, as it is a question that may need to be decided by shareholders depending on how the articles of incorporation and bylaws are written. If approved internally, the corporation will then need to dissolve the corporation by following the home state’s laws. The corporation must then file the articles of incorporation, and pay any required filing fees, with the newly selected domicile state.

Most Popular State

The majority of companies traded on the New York Stock Exchange are domiciled in Delaware. Delaware law is often used as the standard when studying corporate law. The number of incorporations in Delaware indicates that its state laws are business friendly. For example, Delaware does not impose sales or personal property taxes and the fees to incorporate are low. Corporations are also required only to have a minimum presence in Delaware, but are not required to maintain an office in the state, only a registered agent.

Ready to incorporate your business? Get Started Now
How Does a Person Become Incorporated?


Related articles

How to Amend Bylaws in a New York Law Corporation

A corporation's bylaws set its internal rules and procedures. For example, bylaws usually include rules for the election of the board of directors and define the rights of corporate stockholders. A New York law corporation may need to amend its bylaws for various reasons. Provisions may become outdated or no longer serve the corporation's needs. Regardless of the reason, a corporation doing legal business in New York must follow the state regulations for a for-profit corporation when changing its existing bylaws.

Can You Fill Out a 2553 Before the Articles of Incorporation?

A business entity that wishes to become an S corporation must file Form 2553 with the IRS. However, before a business can submit this form, it must first qualify for S corporation status and must file articles of incorporation with the state to incorporate the business.

How Do I Become Incorporated in California?

You incorporate a business in California by filing articles of incorporation with the secretary of state. You can incorporate by yourself or with others. California law has basic requirements that apply to all corporations, such as adopting bylaws and appointing officers and directors. After incorporating, additional state filings are required to keep your corporation in good standing.

LLCs, Corporations, Patents, Attorney Help

Related articles

How to Get an Article of Incorporation in Tennessee

In Tennessee, a new corporation's organizing document is called a "charter." It contains the company’s articles of ...

Virginia Laws Regarding Nonprofit Organizations

In Virginia, nonprofit organizations are referred to as "nonstock corporations": no dividends may be paid to directors ...

How to Write an S Corp Operating Agreement

An S corporation is a qualifying corporation that has elected to be taxed under Subchapter S of the Internal Revenue ...

Corporation Law Notes

A corporation is a legal entity that gradually developed into its modern form over hundreds of years. It is designed to ...

Browse by category
Ready to Begin? GET STARTED