Delaware vs Massachusetts: Where Should You Incorporate?
An in-depth analysis for Boston, Cambridge, and Kendall Square founders comparing Delaware corporate law against Massachusetts corporate excise taxes, carrying costs, and VC standards.
Choose Delaware If:
- You are raising venture capital: Boston tech and biotech VCs (Bessemer, Battery, Flagship, Flybridge) universally require Delaware C-Corps.
- You want specialized corporate courts: Delaware Court of Chancery resolves complex investor and founder disputes without juries.
- You grant stock options & SAFEs: Standard equity management protocols are calibrated for Delaware DGCL statutory rules.
Choose Massachusetts If:
- You run a local service firm: Architecture, legal practices, medical clinics, or local consultancies operating strictly in Massachusetts.
- You want to avoid dual registration fees: Eliminates Delaware foreign qualification ($400) and Delaware registered agent carrying costs.
Should a Massachusetts startup incorporate in Delaware?
If you plan to raise venture capital, yes; Boston-area funds and accelerators overwhelmingly expect a Delaware C-corporation. A company that only operates in Massachusetts and won’t raise institutional money can save the cost of a second state by incorporating in Massachusetts.
What is the Massachusetts minimum corporate excise?
Every corporation doing business in Massachusetts pays at least $456 a year in corporate excise, even with a net loss. The full excise is 8.0% of Massachusetts-apportioned net income plus $2.60 per $1,000 of taxable Massachusetts tangible property or net worth.
The minimum applies to Delaware corporations registered in Massachusetts as well, so a Delaware startup based in Boston pays both Delaware’s franchise tax and the Massachusetts minimum excise.
What does a Delaware corporation in Massachusetts pay each year?
At minimum: Delaware’s $400 franchise tax (Assumed Par Value Capital Method) and $50 annual report fee, a Delaware registered agent, the $456 Massachusetts minimum excise, Massachusetts’s foreign corporation annual report, and a Massachusetts registered agent.