Generally, an online business or e-commerce is the trend now because it provides unlimited opportunities. Also, you have the chance to meet the needs of a lot of people irrespective of the location. Even when your business in a physical office space is thriving well, creating an online business will come in handy as it increases your customer base and widens your reach globally. Just like physical office space, you need to incorporate your online business. The success of your business is dependent on its registration with appropriate bodies and the appropriate state. In this article, we will look at some of the best states to incorporate an online business so it can thrive considerably well.

 

The Best States to Incorporate An Online Business

1. Nevada:​ Nevada is popularly called the biggest little city in the world due to its friendly business environment. It is like fertile ground for businesses and one of the best states to incorporate an online business. Consequently, the city has witnessed a surge in the number of industries, especially technology. The city has revealed its ability to attract many companies through its low tax, high average income, and low cost of doing business. It also has one of the lowest prices to incorporate e-commerce.

 

Benefits of Incorporating An Online Business in Nevada

 

• Low Cost of Operating a Business:​ According to Forbes in 2018, Nevada has a

6% low cost of creating a business or an online business when compared to the national average. Even though e-commerce naturally ha​s a low cost of running than a physical office space, incorporating your business in Nevada affords you more, and your cost reduces significantly.

• Low Tax:​ With your incorporation based in Nevada, you can ignore taxes like corporate income, personal income, inventory, Franchise, inheritance, and loads of others. The only tax you are required to pay is the federal taxes that have a fixe​d rate of 21%.​
• Foreign Registration:​ As an e-commerce owner, you can reside elsewhere and still incorporate your business. Many online business owners take this approach because it allows them to move from one location to another while running other things.
• Strong Asset Protection:​ Incorporating your online business in Nevada guarantees the protection of your asset and liability. This way, you won’t be held responsible for any damages caused by your company.

 

 

Pros

• Privacy
• Protection of asset
• Relatively low tax

Cons

• Tax return
• Expensive registration fee

2. Wyoming:​ Wyoming is a state that has a favorable business climate that accommodates everyone, especially an online business. It is the firs​t State to allow corporations of companies. Wyoming is a state in the USA that has set itself apart as the number one unrivaled provider of ease to business owners. The Government of Wyoming has made the achievement possible by enforcing policies that promote growth in businesses.

 

Benefits of Incorporating An Online Business in Wyoming

 

• No citizenship:​ This makes Wyoming one of the best states to incorporate an online business. You don’t need to be a citizen of Wyoming to register your business there. You can operate your business and live anywhere in the world. All you need to do is to familiarise yourself with Wyoming and know how it works.
• Privacy:​ When your personal information is displayed in the public record, you become easy prey for a lawsuit. When you file for your online business and other ventures in Wyoming, it minimizes your chance of getting sued. And they take this very seriously, so you have nothing to worry about.
• Low Annual Fee:​ The annual fee in Wyoming is based on the number of corporate assets in the State. The price ranges from $50 for small and medium online businesses or corporations to $200 for million-dollars and above corporations. Amazing, right? Meanwhile, those fees only cover assets within Wyoming State and not outside.
• No Income Taxes:​ Everyone would love it if they never had to pay a single tax for the rest of their lives. While this may seem impossible, Wyoming makes a part of that dream come true. When you incorporate your e-commerce here, you don’t need to pay income taxes.

 

Pros

• Privacy
• Zero tax
• Flexibility
• Low start-up fee
• No citizenship required Cons
• More paperwork
• High administrative charges
• Limited life for your business when one person leaves
• Asset protection is only within Wyoming

3. Washington:​ Washington is one of the largest States in the USA. It is one of the best states to incorporate an online business. The state has a reliable internet service that makes operating a business online seamless. This pro-business State harbors some of the outstandin​g and innovative corporations in the world like Amazon, Microsoft, and Starbuck. So, you should consider this state.

 

Benefits of Incorporating An Online Business in Washington

 

• Tax Deduction:​ Like Delaware and Wyoming, you don’t pay income or personal tax when you incorporate your business in Washington. Nevertheless, you are required to pay state business and occupation tax and retail tax. Besides, as a small business owner, you can have access to reduced taxes.
• Seamless Transfer of Share:​ You can transfer your shares to as many persons as you like once you incorporate in Washington. Just ensure that long as there is no restriction stated among shareholders or stakeholders of the corporation.
• Business Incentives:​ When you register your e-commerce in Washington, you have access to some incentives like Washington Foreign Trade Zon​e, a scheme that​ ensures you are exempted from duty payment when importing goods. It, in turn, uplift your business. Pros
• Unlimited business incentive
• Reduced Tax
• Flexibility
• Independence

Cons

• More paperwork
• A long process of incorporation

4. Delaware:​ Despite being the second smallest state, Delaware appears to be one of the best States to incorporate an online business, especially a big one. This feature is due to the State’s favorable incorporation laws. Setting up your e-commerce in Delaware helps with liability and protection of your asset.

 

Benefits of Incorporating An Online Business in Delaware

 

• Privacy Protection:​ Unlike other states, Delaware LLC (Limited Liability Company) hardly categorically lists members’ credentials in their fillings, except for operating agreements. You won’t have to list shareholders, CEOs, Directors, and other stakeholders in your e-commerce.
• Tax Benefits: In​ Delaware State, you don’t pay tax if you don’t have a physical space or office building. It also ensures you have access to other tax benefits like no tax on customers, no corporate tax on income, no personal property tax, and no value-added tax.
• Asset Protection:​ Delaware State hardly allows judgment collectors to infiltrate your e-commerce and chase after your asset. Delaware has a strong structure that protects your asset.
• Cheaper Filing Fee:​ While their fee may not be the cheapest, Delaware’​ s​ filing cost is quite affordable. The price is between $85 to $90 and $300 annual fee depending on some factors.

 

Pros

• Little or no tax
• Protection of asset and liability
• Business-friendly laws
• Residency not required to register

Cons

• Expensive filing rate
• Franchise tax payment
• A Delaware registered agent is required

 

5. Texas:​ According to the Texas Economic Development, Texas is currently the 9th largest economy. With easy access to global markets, you rest assured of reaching more clients when you incorporate your business there. The regulations to be followed by business owners are not so strict and are highly foreseeable. Thus, we can say Texas is one of the best states to incorporate an online business.

 

Benefits of Incorporating An Online Business in Texas

 

• Money Incentive:​ If you incorporate your business in Texas, you get access to Texas Enterprise Fund (TEF). TEF, implemented in 2004, is financial support that provides money for projects and businesses that promise to provide more jobs. Therefore, if finances have been your impediment to creating e-commerce or a company, you can now start incorporating your business in Texas as soon as possible.
• Friendly Tax Climate:​ One of the fears of most business owners is tax. When you incorporate your business in Washington, you pay no income or personal tax. Zero tax allows you to focus on other aspects of your business.
• Protection of Personal Asset:​ One of the most important benefits of incorporating an online business in Texas is that it protects personal assets. There is protection for members of a corporation and shareholders against any liability from some business decisions and acts that may arise.
• Sole Ownership of Corporation’s Name:​ Once you incorporate your business in Texas, the name you choose is legally yours for as long as your company exists. In other words, no other corporation can use the name. This benefit gives your business the sole ownership of the name and keeps other companies from claiming your hard work and input in the company.

 

Pros

• Tax reduction
• Financial aid
• Protection of asset
• Protection of names

 

Cons

• Expensive Filing Fee
• More Days to incorporate

 

Conclusion

 

The advantages of incorporating an online business in some states are enormous. If a business-friendly environment, low tax, aggressive protection of asset and liability sound like something you want, you should consider any of the above states.