I have read somewhere on interent that Texas is most business friendly US state. Can some one guide me is it true that Texas is most friendly for totally internet/online based business and they have very low taxes.
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Recognize that the state of incorporation does not determine where income taxes are owed -- Delaware, for example, does not collect state income taxes from every company employed there.
My general advice is to incorporate in the state where you live. If you're going to get venture or angel backing, re-incorporate in Delaware. (Or, if that's going to be really soon, just start off in Delaware.)
Delaware is generally preferred if you are going to get VC funding.
You can also choose a state with zero taxes such as Wyoming or Nevada.
However if you live in another state your company would need to register as doing business in that state. For example if you live in Florida, you can just as easily get a local Florida LLC.