What is a Delaware Principal Place of Business?

Share this post

When you set up a company in Delaware, what will be your principal place of business? When should you consider your registered agents address as your office address? These are common questions because most of the businesses filed in Delaware operate outside the state.

However, the only requirement for a Delaware address is to have a legal foothold for jurisdictional purposes if your company were to be sued.

What do you mean by a Principal Place of Business?

The principal place of business refers to the headquarters where business decisions are made. This is also known as the nerve centre where the executives exist. Differentiate this with the muscle centre where activities such as production take place. However, modern civil procedure considers your principal place of business to be based on the Total Activities Test.

Your Principal Place of Business is not required to be in Delaware

If you do not operate your business from Delaware, your principal place of business will be somewhere else in the United States or another part of the world.

As an example, if your company is incorporated in Delaware but it is operated out of California office, the principal place of business would be the California office address.

However, if you incorporate in Delaware, your principal place of business may not be in Delaware. Delaware courts will govern the internal affairs of your organisation or LLC. You are not required to feel forced to have extra contracts with Delaware to make an impression that your company is operating out of Delaware.

An LLC has two home states where they subject to general subject matter jurisdiction and in which both states have personal jurisdiction over that company. One is the principal place of business i.e. where the headquarters is located. The second is the paper home of the corporation or LLC i.e. the state in which it filed its Certificate of Incorporation. Very often this paper home in Delaware and the office in Delaware is what is listed as the Registered Agents office.

The registered agent office is not a virtual office that forwards business mail and other correspondence. A registered agents address only forwards mail from the Delaware Secretary of State and lawsuits. Most agents return business mail to the sender. The cost of mail forwarding services is about one thousand dollars per year. They are not part of a registered agent or registered office services.

© 2020, RTRSupports Limited. All Rights Reserved.