Most founders and small business owners did not make a deliberate choice about where to form their company. An attorney may have defaulted to New York, an online service may have selected the owner's home state, such as California, an accelerator may have required Delaware, or a CPA may have simply recommended the state where the CPA practiced.
That decision may have taken minutes, but its consequences recur for the life of the legal entity and its owners. Annual franchise taxes, registered agent fees, regulatory obligations, and unfamiliar governance rules continue until the company changes its domicile. A Delaware corporation may face recurring franchise taxes. A California LLC must generally pay an annual minimum franchise tax, plus a graduated fee that can rise with income. A New York company can still be subject to a lawsuit in the Empire State long after decamping to a high-growth hub like Florida or Texas.
