Why Do Companies Keep Choosing Delaware?

Delaware has a longstanding reputation for being a popular place for companies to establish their headquarters. More than 1.4 million businesses have made Delaware their legal home, including two-thirds of all Fortune 500 companies.

WuXi STA, box manufacturing company Delmarva Corrugated Packaging and logistics real estate firm Dermody Properties all opened locations in Delaware in the last two years, bringing plans for more than new 600 jobs and $850M in capital investments to the state, according to the Delaware Prosperity Partnership. 

But while the fact that there are many businesses headquartered in Delaware may be well-established, what may be less known are some of the reasons why companies consistently choose the First State as the place to set up shop. 

“The key to Delaware’s popularity is its business-friendly climate,” Kent Economic Partnership Executive Director Linda Parkowski said. “Delaware ranks second-lowest for business costs in the nation and there is no sales tax, no inventory tax and no value-added tax.” 

Parkowski’s organization, the Kent Economic Partnership, works to spur economic development in Central Delaware, and she is an expert on all that Delaware has to offer companies both large and small. Bisnow spoke with her, as well as John Taylor, the director of economic research for the Delaware Prosperity Partnership, and Rod Ward, the CEO of CSC, a Delaware-based company that offers compliance, legal, tax and digital brand solutions, to learn more about why businesses keep choosing Delaware. 

Taylor pointed out that along with Delaware’s unique tax structure, the state has been ranked one of the most affordable places to do business in the entire country. He added that even businesses that don't choose to stay in the state experience tax benefits — companies that incorporate in Delaware but do not conduct their business in the state still only pay an annual franchise tax of around $300, regardless of their revenue. 

“In a recent study done by KPMG, Delaware ranks among the top three states nationwide for corporate tax favorability,” Parkowski said. “This study also ranked Delaware No. 1 nationwide for tax favorability in the manufacturing sector.” 

Delaware also offers an equitable, knowledge-based climate for businesses. The state’s Chancery Court is a court of equity — there are no jury trials in Chancery Court, and Court of Chancery judges, known as chancellors, are appointed based on their experience in corporate and business law. Businesses can feel secure that any legal issues will be resolved equitably by experts who fully understand the situation and the intricacies of Delaware corporate law.

While low taxes and favorable legal conditions are major draws for companies, businesses also need access to talent in order to thrive. 

“If you don't have a great location and a deep talent pool, there's really no way to compete,” Taylor said. “Delaware has a wide range of talent — particularly in the life sciences and financial sector — people are often surprised to learn that because of our small size.” 

Ward, whose company has offices throughout the U.S., Canada, Europe and the Asia-Pacific region but chooses to keep its headquarters in Delaware, pointed out that Delaware has a diverse range of business communities, from banking and healthcare to bioscience and legal services, all of which feed into its talent pool. The state is home to several prominent colleges and universities, including the University of Delaware and Delaware State University. 

Adding to the Delaware talent pool is its location. The state is located right along the Northeast Corridor, which runs from Portland, Maine, to Richmond, Virginia, which allows Delaware companies to recruit talent from all of the major Northeast cities. 

“Delaware offers sort of a ‘Goldilocks’ scenario,” Ward said. “It's big enough to offer sophisticated, professional run services and to have access to a wide range of talent, but it's small enough so there’s not a lot of congestion and companies don’t have to fight for resources.” 

Parkowski added that out of all the states on the Northeast Corridor, Delaware offers some of the lowest cost-of-living options, which is another draw for companies that want to find a place where their employees can get the benefits of big-city living for less. 

“Our housing costs are among the lowest in the region, and whether people are searching for a suburban environment, an urban feel or a rural homestead, we have it all right here,” Taylor said. 

All of these factors may have contributed to Delaware’s population growth. The state has experienced a 10% increase in population in the last 10 years, with the most growth seen in Sussex County, the southernmost of the state's three counties. Despite this, Parkowski said, it has not lost the little things that make Delaware unique. 

“Despite the state’s growing population, it still maintains a small atmosphere and leaders and elected officials are very accessible,” Parkowski said. “It does not take much to request time from elected officials and to get things done.” 

This article was produced in collaboration between the Delaware Prosperity Partnership and Studio B. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.