About Delaware LLC.
Delaware LLC (Limited Liability Company) – is a type of corporate entity in Delaware State (USA) that is formed by one or more members (partners) to conduct business. Delaware LLC has no Directors or Shareholders but rather Members who can also act as Managers to (or appoint non-Member Manager(s)) to perform everyday business duties. Each Member of Delaware LLC holds certain number of shares of the entity and benefits from company profits. Members liability is limited however to the amount of contribution to company.
Taxation in Delaware
Delaware charges no income tax on corporations not operating within the state. In other words, if your company made profit outside of the Delaware State (non resident income), you pay no corporation tax. So taking advantage of Delaware’s other benefits does not result in an income tax cost. In general, the state is viewed as a positive location for corporate tax purposes because favorable laws of incorporation allow companies to minimize the corporate expenditures.
Why incorporate Delaware LLC (Limited Liability Company) ?
Delaware is well known as a corporate haven. Over 50% of U.S. publicly-traded corporations and 60% of the Fortune 500 companies are incorporated in that state.
Apart from corporation tax regime for non resident profits, one of the best reasons for Delaware LLC (limited liability company) formation is to separate your personal assets from your company’s assets. If you conduct business without using a limited stock company or LLC you place your assets at risk. Putting your personal property aside from your business property and using a legal form such as a Corporation or LLC can help protect your personal property.
Incorporation or formation of a limited liability company also allows you to take advantage of the statutory and judicial laws of Delaware, to help you plan how your business runs.
Delaware State has a separate Court of Chancery (or a business court). The Court does not use juries and the judges are appointed on merit (not elected). Because there are no juries, decisions from the Chancery Court are issued as written opinions. Therefore Delaware has a large body of written legal precedent to rely on.
Favourable Corporate Laws
Delaware’s General Corporation Laws make it the friendliest state in America for corporations and LLCs.
Some other advantages include, but not limited to:
- Delaware’s large body of business laws helps a company plan carefully to avoid a lawsuit.
- Delaware’s Chancery Court oversees matters involving Delaware’s General Corporate Law and has a reputation as one of the finest courts in the country.
- Chancery Court issues decisions without jury trials, so their decisions are written, well thought-out and easy to follow.
- Legal textbooks rely heavily upon Delaware corporate case law to teach law students because of the well written opinions from the Delaware Judiciary, so most American corporate attorneys have studied Delaware corporate law.
- The Delaware Division of Corporations generates a considerable amount of revenue for the State, so they have invested in state-of-the-art imaging equipment, and process new filings very quickly.
- A handful of Delaware registered agents, including TradeFormation, have direct connections to the Division of Corporation’s electronic database, and can file your corporation formation documents electronically.
The initial charge for incorporating in Delaware can be as low as 125 USD for US residents and as low as 225 GBP for non-US residents. The cost of continuing operations is low as well. There is no Delaware corporate income tax for corporations that are formed in Delaware so long as they do not transact business in Delaware. There may be significant federal tax advantages to incorporating as well.
These are some very good reasons to incorporate in Delaware:
- Different kinds of business can be transacted under one corporate roof.
- Shareholders can act in writing instead of holding meetings.
- You can add people to the board who are not shareholders.
- Corporate records need not be kept in Delaware.
- One person can act as the only officer, director and shareholder of a corporation.
- No Delaware income tax is charged to companies that do not do business in Delaware.
- Delaware has no sales or personal property tax.
- Low franchise tax, $175.00 for Corporations, $300.00 for L.L.C.’s
If you need more details on Delaware LLCs, please, feel free to contact us.