Nevada vs. Delaware: Why More Business Owners Are Making the Switch

For decades, Delaware has been the default choice for company formation in the U.S., thanks to its well-developed corporate law and specialized Court of Chancery. Delaware’s legal framework has long been attractive to corporations and investors because it provides a comprehensive body of case law and predictable outcomes in business disputes. For many growing businesses, especially those seeking outside investment, these features create legal certainty that can simplify governance and investment processes.

In recent years, however, a noticeable number of companies have reconsidered Delaware as their primary jurisdiction of incorporation. One of the most commonly cited reasons is Nevada’s absence of state corporate income tax and franchise tax, which can reduce ongoing tax liabilities for certain types of businesses, particularly smaller entities and closely held firms. Nevada also has relatively lower ongoing regulatory burdens and offers strong privacy protections in public filings, which can be appealing for business owners who prioritize confidentiality.

Another factor drawing interest to Nevada is its corporate law framework, which in some areas favors managerial discretion and places fewer statutory obligations on directors and controlling shareholders. These legal differences can make Nevada more attractive for founder-led companies or those that want flexibility in governance and fewer shareholder litigation risks. Additionally, public moves by notable firms reincorporating in states like Nevada and Texas have sparked broader conversations about alternatives to Delaware’s traditional dominance.

It’s important to note that Delaware’s institutional knowledge, sophisticated judiciary, and extensive body of business law remain advantages for many companies , especially those planning outside investment or future public offerings. At the same time, Nevada’s competitive legal environment, tax climate, and privacy features make it a viable alternative for certain business models and ownership structures. Choosing where to incorporate should align with each business’s legal priorities, growth goals, and investor expectations.