Why do so many businesses incorporate in Delaware?

Delaware has more registered businesses than any other state at more than 2 million. For context, New Mexico has about 15,000. Almost 68% of Fortune 500 companies are organized in Delaware.

Why this happens

Delaware has an entire court specifically dedicated to business law. It's called the Court of Chancery and it has been deciding business disputes and tweaking the state's business law for over 230 years. This makes the process of resolving disputes faster and with more foreseeable outcomes.

London Court of Chancery, DE's predecessor

By contrast, business disputes in other states are heard in the same, often backlogged, courts as all other cases. With every state having different laws, legal outcomes vary widely. Some states, like New Mexico, have relatively little law to begin with so courts have much less state-specific information to work with.

Is Delaware right for your business? Likely not.

For large companies that operate nationwide and beyond, a state with the most established legal framework for businesses that goes back centuries is a good fit for a corporate home.

For small businesses, it's a different story. Even if you incorporate your NM business in Delaware, you will still have to register in NM if you want to do business here. You'll have to pay double fees and, sometimes, double taxes.

NM is better than DE for small businesses

Delaware is also praised for its low fees and legal flexibility, but New Mexico has lower fees and fewer reporting requirements for businesses than Delaware.

For small businesses that are unlikely to need the fancy business court, New Mexico makes more sense as a corporate home.

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