If you choose to incorporate outside of your home state, you will have to qualify as a foreign corporation in your own home state. Take the example of you forming your corporation in Delaware, Wyoming or Nevada (these are the most popular states for incorporating), when you actually are present in a different state. This means your business will be considered a foreign corporation in your home state.
The Mechanics of Incorporating
When deciding on a location to incorporate, you must first ask yourself where you will be conducting all or the majority of your business. Also consider the benefits provided by the state including ownership, privacy, tax benefits, and publicly traded growth potential. The first step to incorporating is to form a corporation or partnership. Once you have decided on your business structure, you will need to file in the court of jurisdiction in the state in which you choose to incorporate. In Delaware, for example, all corporate matters are handled in the Court of Chancery.
Some states require that you file fictitious name, or DBA, papers. DBA stands for "doing business as" and, in simple terms, is your official business name. You will also have to file tax forms for that state and develop an understanding of the corporate laws for that state. To ensure all of these steps are taken, some states require you obtain a registered agent in the state to oversee this process on your behalf.
Taxes and Fees for Foreign Corporations
In most cases, registering as a foreign corporation or limited liability company (LLC) will subject you to all the same taxes and fees as an in-state company. It is important to balance the tax and corporate protection benefits of incorporating in one state with the costs of registering as a foreign corporation in your home state. Additionally, if you plan on setting up offices or engaging in business in more than one state, we recommend you consult with an attorney who is familiar with the foreign corporation rules.