How is it better to have your business located in,?
some staes dont have state taxes but thats all i heared. are their other reasons why it is better for a business. citibank chose south dakota for their main bank for a reason.
Answers:
Corporations can be registered in one state and actually do most of its business in others. Therefore, the choice of location of registration is for "other" usually choice of law or legal reasons. However, if a corporation has significant contacts with a specific state it should registere in the state as a foreign corporation.
Many corporations are registered in Delaware because Delaware historically has had some of the most progressive corporate laws that are in the corporation's favor.
I was informed one time that Citibank chose South Dakota for its credit card operations because South Dokota has a very high USURY rate. The usury rate is the interest rate that a company can charge a person legally (if you charge over that rate you cannot collect any interest and a lawsuit to collect the debt can be delayed). Some states have historical usury rates as low as 11% which is well under the 20-25% rates that credit card companies charge for bad credit. Credit card operations were originally very concerned about usury laws but most states have enacted laws that allow much higher rates.
One of the reasons that Nevada is a popular state is that it has strict privacy laws and information about the owners of small corporations has stronger protections.
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