Deleware is great because it knows how to deal with businesses.<p>If I recall correctly, it's one of the only states that has a dedicates Court of Chancery [1]- Essentially special courts that are focused on business law, rather than being generalized.<p>This lets them build up a large body of precedent , but more, it means the judges are going to be dealing exclusively with civil cases, and can can focus on the needs of businesses.<p>Because of this, the court has come to be regarded as the countries experts business law. [2]<p>
[1] <a href="http://www.delawoffice.com/chancery.html">http://www.delawoffice.com/chancery.html</a><p>
[2] <a href="http://72.14.253.104/search?q=cache:l4-0NQmIQc0J:corporate-law.widener.edu/ctofchan.htm+Court+of+Chancery+delaware&hl=en&ct=clnk&cd=5&gl=us&client=firefox-a">http://72.14.253.104/search?q=cache:l4-0NQmIQc0J:corporate-law.widener.edu/ctofchan.htm+Court+of+Chancery+delaware&hl=en&ct=clnk&cd=5&gl=us&client=firefox-a</a>
Not sure how California is but read the Delaware wiki about why Delaware's best for incorporation:
<a href="http://en.wikipedia.org/wiki/Delaware_corporation">http://en.wikipedia.org/wiki/Delaware_corporation</a>
The short answer would be because the Delaware courts are favorable toward big business, much like New York. A long case history biased in favor of you, the business, is much more useful to you than a case history biased in favor of the consumer (California). <p>Legal troubles of any sort are a tremendous waste of expense and time and can cripple any company, big and small. That alone is worth incorporating in a company-friendly state.
It is just the long history of case law make it a more "definate" legal venue. Most laws in the US are determined by actual cases, in court, and not in the actual written laws.<p>Nevada is also popular to incorporate in. I've always incorporated in Nevada because of lack of state income tax and it's favors to small business.