Delaware. A U.S. state you think about so little that you’re probably thinking right now, “Dela-where?” Delaware is the second smallest U.S. state, located in the north-east bordering Maryland, Pennsylvania and New Jersey. Many U.S. corporations register in Delaware as it is one of the most business-friendly jurisdictions throughout the country. Over 50% of U.S. publicly listed corporations, and 60% of the Fortune 500 companies are incorporated in Delaware. The State of Delaware also provides more flexible investment laws than other states. But what does this mean for Australian startups and businesses?

Incorporating in Delaware

If you are interested in incorporating overseas, particularly in the United States, you should be aware of the legal obligations and regulations that you must adhere to. In the U.S., each state has different laws. Fortunately, Delaware law for businesses is much more developed and streamlined compared to other states. For example, Delaware has specialised courts that exclusively deal with corporate disputes and consequently, is seen to be more business-friendly.

Moreover, the cost and process of registering a corporation, business or startup in Delaware is relatively easy and affordable. For non-US residents, incorporating in Delaware is one, if not the easiest, of the states to form a corporation. You want to form a Delaware corporation, and not an LLC or partnership.

Have Australian startups incorporated in Delaware?

Yes. In fact, Australian seed funds have promoted Delaware as a destination for incorporation. In 2012, Australian seed fund Startmate advised a batch of startups to incorporate in Delaware due to its payments infrastructure. This allowed the startups to operate and accept payments from around the world, yet still operate in Australia.

You should be aware that if you do incorporate overseas, you may need to transfer your assets such as your intellectual property from your Australian company to your U.S. company. This may result in tax implications such as stamp duty.

Relocating an Australian startup to the USA

In addition to arranging work visas and registering online for a Delaware “C-corp”, there are a number of important considerations before relocating, or incorporating for the first time in the States. Employment law in the United States is very different compared to Australian employment law. For example in the U.S., there is only one week of annual leave, compared to the four weeks in Australia.

Works visas are complicated in the United States. Most require the prospective employer, agent or sponsor to file a petition with the United States Citizenship and Immigration Service (also known as USCIS). The Visa Waiver Program may also apply. If you are planning to fly to the U.S. for preliminary meetings, you can obtain a temporary work permit. However, if you plan to work there long-term, you must locate an employer or sponsor.

Conclusion

Incorporating in Delaware, or relocating a startup to the United States involves a lot of planning and research. For its freedom, ease and convenience, and investor-friendly system, it’s no surprise many successful companies have been formed out of Delaware. 

We work with a number of startups and businesses that have relocated overseas, including the United States. If you need capital raising advice or setting up a startup for the first time, we can assist.

Questions? Fill out the form on this page.

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.
Anthony Lieu

Get a Free Quote Now

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

  • We will be in touch shortly with a quote. By submitting this form, you agree to receive emails from LegalVision and can unsubscribe at any time. See our full Privacy Policy.
  • This field is for validation purposes and should be left unchanged.

Privacy Policy Snapshot

We collect and store information about you. Let us explain why we do this.

What information do you collect?

We collect a range of data about you, including your contact details, legal issues and data on how you use our website.

How do you collect information?

We collect information over the phone, by email and through our website.

What do you do with this information?

We store and use your information to deliver you better legal services. This mostly involves communicating with you, marketing to you and occasionally sharing your information with our partners.

How do I contact you?

You can always see what data you’ve stored with us.

Questions, comments or complaints? Reach out on 1300 544 755 or email us at info@legalvision.com.au

View Privacy Policy