Some entrepreneurs might be tempted to incorporate their businesses in “incorporation-friendly” states such as Nevada or Delaware, but attorney Mark Kohler says they should think again. Instead, incorporate in the state where you live and where your company does business.
“If your state filing fees are a lot, don’t think that you can avoid them by setting up in another state and hiding,” Kohler says. “Too many [people] get into lawsuits where they don’t get legal protection they thought they’d get because they were incorporated in the wrong state.”
Mark J. Kohler, a certified public accountant in Irvine, Calif., is a partner in the accounting firm Kohler & Eyre, and the law firm Kyler, Kohler, Ostermiller, & Sorensen LLP, specializing in business, estate and tax. He is the author of What Your CPA Isn't Telling You from Entrepreneur Press.