You can incorporate your startup in Washington or Delaware. Either is fine. Washington is cheaper. Some out-of-state investors may prefer that you incorporate in Delaware. If you change your mind, you can always convert from a WA entity to a DE entity or vice versa.1
Delaware’s corporate law is business friendly, well developed, and updated frequently. Delaware has a special court - the Court of Chancery - that only handles corporate legal disputes. Deleware judges are corporate specialists, while Washington judges are legal generalists.
A WA incorporation is about $1,000 cheaper than DE in terms of filing fees, registered agent fees and foreign entity qualification fees. Maintaining the WA entity in good standing will be about $400 cheaper per year for the first few years.
If you move the company’s headquarters from Seattle to Silicon Valley or another state, you will likely need to convert it to a DE entity. Lawyers in every state know DE law, but it’s difficult to find an expert in WA corporate law outside of WA.
Incorporating in DE doesn’t let you avoid Washington’s Business and Occupation Tax. Any company doing business in WA or hiring employees in WA will owe B&O Tax, regardless of where they incorporate.
Where Seattle Startups and Public Companies are Incorporated
- DocuSign is a Delaware corporation.
- Redfin is a Delaware corporation.
- Moz is a Delaware corporation.
- Cyanogen is a Delaware corporation.
Boeing is a Delaware corp.
- Zillow is a Washington corporation.
- Amazon was originally incorporated in Washington in 1994, and reincorporated in Delaware in 1996.
- Microsoft was originally incorporated in Washington in 1981, then reincorporated in Delaware in 1986, and then re-reincorporated back in Washington in 1993.
- Costco is a WA corporation.
You can incorporate in either state and still build a hugely successful company. Don’t burn too much time on this decision.
Where to Incorporate. Startup Law Blog 2011 (Washington lawyer).
Delaware vs. Washington: Where should I incorporate my startup? Trent Dykes, 2010 (Washington lawyer).
Most Entrepreneurs Should Incorporate Locally. John Myer, February 15, 2011 (Washington lawyer).
Should I form my Austin startup in Texas or Delaware? Jose Ancer, 2013 (Texas lawyer).
What state should I incorporate in? Yokum Taku, 2009 (California lawyer).
Conversion isn’t free, but it’s not super-expensive either. ↩