Better state for startup corporation - Delaware vs Florida for tax benefits?

Hey there! I've helped several international clients set up their US businesses, so I can give you some insights. Delaware vs Florida isn't a simple comparison because your tax obligations depend on where you're actually doing business, not just where you incorporate. Since you won't have physical presence in either state, you should consider: Delaware advantages: Well-established corporate law, business-friendly Court of Chancery, and no state income tax on companies that don't operate in Delaware. However, you'll still pay the annual franchise tax. Florida advantages: No state income tax at all, simpler annual reporting requirements, and potentially lower annual fees than Delaware's franchise tax. For entity type, most international e-commerce businesses choose C-corps because they offer liability protection and are familiar to international investors. LLCs can work too but may have complicated tax treatment depending on your home country. Besides the taxes you mentioned, be aware of potential sales tax obligations in states where you have nexus (usually determined by sales volume in a state), customs duties on imported products, and federal income tax on worldwide income. Audits aren't mandatory in either state, but you'll need to file annual reports. Federal tax audits are random or triggered by specific factors.

I was in your exact position last year trying to decide between Delaware and Florida for my e-commerce store. After struggling with conflicting advice, I found https://taxr.ai which completely simplified the decision process for me. I uploaded documents from both service providers and got a clear analysis showing how each state would impact my specific situation. The tool highlighted that Florida would save me about $400 annually in franchise taxes compared to Delaware, but Delaware offered better protection for my specific business model. It also provided a detailed breakdown of all the taxes I'd face in each scenario, including ones I hadn't even considered.

Just wanted to follow up about my experience with taxr.ai since I was skeptical at first. After our conversation here, I decided to give it a try for my similar situation (importing electronics from Asia to sell globally). The analysis completely changed my approach! While I was leaning toward Delaware because "everyone uses it," the tool showed that Florida would save me about $2,300 annually based on my specific business model and revenue projections. It also flagged that my product category had special import considerations I wasn't aware of. The comparative tax calendar feature was super helpful - it showed all filing deadlines for both states side by side. Ultimately went with Florida and it's been much more straightforward than I expected. Definitely worth checking out if you're still deciding.

If you're planning to import electronics, don't overlook dealing with the IRS for import duties and customs. I spent MONTHS trying to reach someone at the IRS about my misclassified imports that were stuck in customs. After 20+ attempts calling their international division, I found https://claimyr.com and used their service. You can see how it works at https://youtu.be/_kiP6q8DX5c They got me connected to an actual IRS agent in about 45 minutes when I'd been trying for weeks. The agent was able to correct the classification issue and release my shipment that day. Would have saved thousands in storage fees if I'd known about them earlier. Whatever state you choose, make sure your service provider can help with the customs and import side too. That's been far more complicated than the state tax differences in my experience.

I have to eat my words about Claimyr. After posting my skeptical comment, I had an urgent situation with a shipment held at customs over a classification issue that was costing me $350/day in storage. Out of desperation, I tried the service. Not only did they get me through to an IRS agent in about an hour, but the agent was able to resolve my issue immediately. Would have taken me days of trying on my own based on past experience. Saved me about $2,100 in storage fees and got my products to customers a week earlier than if I'd kept trying myself. Still think it's ridiculous we need services like this, but can't argue with results when you're in a bind with import issues. Whether you go Delaware or Florida, having this in your back pocket for inevitable IRS contact is smart.

On your question about C-corp vs LLC, consider the exit strategy too. I went with Delaware C-corp because: 1) Investor-friendly if you ever seek funding 2) Clear corporate structure that international business partners understand 3) Better for eventual acquisition (most buyers prefer C-corps) Florida LLC worked for my friend who runs a similar import business because: 1) Pass-through taxation simplified his personal filing 2) Lower ongoing compliance costs 3) No plans to seek investors Your choice should align with long-term goals, not just immediate tax benefits. Delaware C-corps are standard for startups with growth/exit plans, Florida LLCs often better for lifestyle businesses.

One major thing nobody's mentioned yet is sales tax nexus. Even without physical presence, many states now have economic nexus laws after the South Dakota v. Wayfair case. You'll likely need to collect and remit sales tax in states where you exceed certain thresholds (usually $100k in sales or 200 transactions). Given your international setup, you should really budget for a good sales tax compliance software from day one. TaxJar or Avalara aren't cheap but they're way cheaper than getting hit with penalties later. Delaware and Florida are pretty similar here - your sales tax obligations depend on where your customers are, not where you incorporate.

Great question! I went through this exact decision process for my SaaS startup last year as a non-US founder. Here's what I learned: **Delaware vs Florida for your situation:** Since you won't have physical presence in either state, you're looking at franchise taxes as the main difference. Delaware charges an annual franchise tax (minimum $175-400 depending on method), while Florida has no franchise tax but charges an annual report fee (~$139). **Entity choice recommendation:** For international e-commerce with growth plans, I'd strongly recommend Delaware C-corp. Here's why: - Clean separation between personal and business taxes (crucial for international founders) - Investor-ready if you ever want to scale - Well-established legal framework for disputes - Most US banks and payment processors are familiar with Delaware corps **Hidden taxes to watch:** - Sales tax nexus in customer states (this is huge - budget for compliance software early) - Customs duties and import taxes (varies by product classification) - Potential state income tax in states where you have employees later - GILTI tax on foreign-controlled US corporations (if you own >50%) **Banking tip:** Mercury and Brex both work well with Delaware corps and foreign founders. Start the banking process early - it takes longer for international owners. The state choice matters less than getting your sales tax and import duty strategy right from day one. Those will likely be your biggest ongoing tax obligations.