Delaware vs New York: Where Should You Incorporate?
An in-depth guide for Silicon Alley founders comparing Delaware corporate governance against New York State and NYC business taxes, foreign qualification, and reporting fees.
Choose Delaware If:
- You are raising outside venture capital: NYC venture funds (USV, Thrive, Insight) standardly require Delaware C-Corps.
- You want specialized corporate law: Delaware Court of Chancery judges resolve shareholder and fiduciary disputes without juries.
- You are issuing SAFEs or equity options: Automated equity management tools are calibrated around Delaware statutory DGCL rules.
Choose New York If:
- You run a local service business: Restaurants, retail shops, or boutique agencies operating strictly within New York State.
- You want lower annual report fees: New York requires only a $9 biennial statement every 2 years, vs Delaware’s $50 annual report.
- You want to avoid dual registration: Eliminates Delaware registered agent and Delaware annual franchise taxes.
Statutory Feature & Cost Comparison Matrix
Side-by-side legal requirements, taxation rates, and annual state filing obligations.
| Feature | Delaware | New York |
|---|---|---|
| Annual Entity Report Fee | $50 Annual Report | $9 Biennial Statement (Every 2 years) |
| State Corporate Income Tax | 0% on out-of-state income | 6.5% - 7.25% (plus $25+ fixed dollar minimum) |
| NYC Corporate Tax (If in NYC) | 0% | 8.85% NYC Business Corporation Tax |
| Judicial Court System | Delaware Court of Chancery (Bench, no juries) | NY Commercial Division / Supreme Court (Jury trials) |
| Foreign Qualification Fee | $245 (if out-of-state entity registers in DE) | $225 flat fee for Delaware C-Corp in NY |
| Newspaper Publication Rule | None | Exempt for C-Corps ($1,000+ only for NY LLCs) |
Should a New York startup incorporate in Delaware or New York?
For a startup that plans to raise venture capital, Delaware is the standard. Either way, a company based in New York pays New York State franchise tax, and New York City corporate tax if it operates in the city, because those taxes follow where you do business.
What does a Delaware corporation owe in New York?
It files an Application for Authority with the New York Department of State to do business in New York, then pays New York State corporate franchise tax (6.5% to 7.25% of apportioned income, or a fixed-dollar minimum) and, inside New York City, the 8.85% city corporate tax on city-allocated income. New York’s biennial statement costs $9 every two years.
On top of that it pays Delaware’s franchise tax and $50 annual report fee, typically $450 a year under the Assumed Par Value Capital Method.
Does the New York publication requirement apply to Delaware corporations?
No. New York’s requirement to publish formation notices in two newspapers, which can cost $1,000 or more, applies to LLCs, including foreign LLCs registering in New York. Corporations are not subject to it.