For many Georgia business owners, an early (and important) decision is where to form their company. The natural choice is Georgia, but some hear about Delaware—often called the “corporate capital” of the United States—and wonder whether they should form there instead.

The right answer depends on the business owner’s business model, growth plans, and long-term exit strategy. Below, we highlight key differences between Georgia and Delaware corporate law—particularly for Georgia business owners considering future fundraising, growth, or a planned exit.

Cost & Compliance

For most Georgia-based businesses, the simplest and least expensive option is to incorporate or form in Georgia. Formation fees are modest, annual renewal fees are low, and the filing process with the Georgia Secretary of State is straightforward. Once formed, a Georgia corporation or limited liability company needs only a single registered agent located in the state.

By contrast, Delaware tends to be more expensive. Not only are the initial filing fees higher, but Delaware also charges an annual “franchise tax” which increases as a company grows. Businesses formed in Delaware but operating in Georgia must also register as “foreign corporations” in Georgia. That means maintaining filings and paying fees in two states, as well as retaining a registered agent in both.

For Georgia businesses with no immediate plans to raise out-of-state investment, this added complexity often outweighs the benefits of forming in Delaware. 

Courts & Legal Predictability

A significant reason large companies and investors prefer Delaware is its court system. Delaware has a specialized business court, the Delaware Chancery Court, that handles only corporate disputes. These cases are decided by judges who are experts in corporate law, not by juries. Over the decades, these Delaware courts have built up a large body of predictable case law, giving business owners and investors confidence about how disputes will be resolved.

Corporate disputes in Georgia are typically handled in general trial courts, which hear everything from business cases to personal injury lawsuits. And while Georgia judges are capable and fair, the system is not as specialized or predictable as Delaware’s. For most small, closely held Georgia companies, this difference is unlikely to be material. But for larger companies or those raising money from institutional investors, Delaware’s predictability is often seen as a major advantage. 

It is worth noting, however, that Georgia recently established a specialized business court (called the Georgia Statewide Business Court), which is designed to handle complex commercial cases similar to the Delaware Chancery Court. If the Georgia Statewide Business Court continues to grow and develop its own predictable body of case law, it’s likely that even larger businesses may select Georgia as their place of incorporation or formation.

Flexibility in Company Rules

Delaware has a reputation for offering business owners the most flexibility when it comes to setting the rules for how their company operates. Its corporate statute (for corporations, the Delaware General Corporation Law, and for limited liability companies, the Delaware Limited Liability Company Act) is designed to give founders and investors wide latitude to tailor bylaws, shareholder agreements, operating agreements, and voting arrangements. Because so many companies incorporate or form in Delaware, lawyers and investors across the country are extremely familiar with Delaware law. This makes financing and exit transactions with out-of-state parties often more straightforward.

Georgia corporate law (located at Title 14 of the Georgia Code), while effective, reliable, and potentially just as flexible, is less well-known. As such, investors who are not based in Georgia may be less familiar with it, which can sometimes lead to requests that a company convert into a Delaware entity before closing an investment or exit. That said, for family-owned or closely held companies without plans to bring in out-of-state investors, Georgia corporate law is more than sufficient and generally easy to manage.

Privacy Considerations

Another difference between the two jurisdictions involves the amount of information that must be disclosed publicly. In Delaware, corporations and limited liability companies are not required to list the names of their officers, directors or managers in their annual filings with the state. This provides a greater degree of privacy for business owners and management teams.

In Georgia, corporations must list their principal officers—typically the CEO, CFO, and Secretary—in their annual registration with the Secretary of State. These filings are public records and are searchable online. Directors, however, are not required to be disclosed. For Georgia limited liability companies, the filing must identify the manager(s), if the limited liability company is manager-managed.

For most small and mid-sized businesses, the public disclosure of officers or managers is not a significant concern. However, for owners who prioritize privacy, Delaware offers greater anonymity.

Planning for an Exit

Many business owners and entrepreneurs eventually sell their business—whether to a strategic buyer, a private equity fund, or another local company. Some sellers worry that being a Georgia corporation or limited liability company may hurt their chances of attracting buyers who are used to Delaware. In practice, this is rarely a deal-breaker. A buyer can just as easily acquire a Georgia company as a Delaware one. If the buyer strongly prefers Delaware, it is often straightforward to convert or merge into a Delaware entity as part of the transaction (though additional financial and time costs may be incurred).

Key Takeaways

For Georgia-based businesses that are locally operated and closely held, incorporating in Georgia is usually the best option: it’s cost-effective, simple, and avoids duplicate filings. For businesses seeking outside investment, particularly from out-of-state venture capital or private equity firms, Delaware offers a legal framework that investors know and trust. 

Importantly, the decision is not permanent. A company that starts in Georgia can always convert into Delaware later if circumstances change. 

How We Can Help

Choosing where to incorporate or form is one of the earliest decisions a business owner will make—and one that can have implications for future growth and exit planning. Our Corporate team regularly advises Georgia business owners on entity formation, corporate conversions, and preparing for and executing future investments or sales.

To discuss whether Georgia or Delaware is right for your business—or to plan for its long-term future—contact Matt Gobel at [email protected] or reach a member of our Corporate team at 912.236.0261.