Some of the most popular states in which companies typically choose to incorporate are Nevada, Delaware, and Wyoming. Many new C Corp owners do not realize that it is possible to incorporate in a state other than the one in which they live or operate. However, through a process called “foreign qualification”, it is possible and often advisable.
If your company operates only in a small area, it may be advisable to file within your state. The main reason for this is that many states require corporations that foreign qualify to pay additional taxes and fees which can be a financial burden for smaller companies. There are also some logistical issues that are related to foreign qualification that may cause additional expenses.
If your company is large, has many shareholders, or operates on a large geographical scale, foreign qualification may be the best option. Each state has different tax and filing requirements so it may be advantageous for your company to foreign qualify.