Forming a Corporation or Limited Liability Company (LLC) in Delaware

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We've compiled for you here material commonly associated with incorporating or forming an LLC in Delaware. While we strive to maintain correct and current information, we cannot guarantee its accuracy and strongly recommend you verify all considerations and consult with a qualified professional before incorporating or forming an LLC.

Delaware is one of the premier states in which to incorporate or form an LLC. Larger companies in particular are attracted to Delaware. In fact, over 50% of the Fortune 500 companies and those listed on the New York and American stock exchanges are Delaware corporations. In fact, there are more that 650,000 corporations with Delaware as their legal home!

Delaware is widely known as a business-friendly state. Most of the modern U.S. corporation case law has been written by the Delaware Court of Chancery, a 210 year old business court where judges, rather than juries, render decisions. The court specifically addresses corporate law and has a reputation for rendering pro-business decisions.

It should be noted that a great many of the advantages of incorporating or forming an LLC in Delaware apply primarily to large public companies and smaller businesses are not likely to experience comparable benefits.

Business Structure

• A Delaware corporation can be formed by one or more incorporators.
• A Delaware corporation can have one or more directors and all of the corporation’s offices can be held by one person.
• One person can be the sole director as well as hold all of the offices of a Delaware corporation.
• One person can be the sole member and/or manager of a Delaware LLC.
• Directors can form or change a corporation’s by-laws.
• Delaware corporations can shield directors from personal liability stemming from good faith actions as board members.
• Corporate shareholders/directors/officers and LLC members/managers need not be Delaware residents.

Location

• Shareholders, directors and officers of corporations do not have to be residents of Delaware, nor do members and managers of LLC’s.
• A Delaware corporation’s main office need not be located in the state and the corporation is not required to maintain offices in Delaware.
• Corporate records do not have to be kept in Delaware.
• The corporation does not have to maintain a bank account in Delaware.

Costs & Taxes

• Delaware is one of the top 10 states having the most favorable tax climate for businesses.
• Delaware is one of the least expensive states in which to form a corporation or an LLC.
• No minimum capital is required to incorporate in Delaware.
• Delaware’s annual charges for corporations are among the lowest.
• There is no state income tax for Delaware corporations or LLC’s not conducting business in Delaware.
• At the time of posting this article, there is a state corporate income tax (8.7%) on business done in Delaware as well as a franchise tax, based on capitalization, running from $30 up to a maximum of $130,000.
• There is no personal income tax for non-residents.
• There is no Delaware inheritance tax on shares owned by non-residents.

Privacy

• Directors and officers of a Delaware corporation need not be listed in the articles of incorporation.
• Members and managers of a Delaware LLC need not be listed in the formation documents.

Foreign Qualification

If you are considering forming your corporation or LLC in Delaware but you will not operate there, your company must foreign qualify in each of the other states in which you will be doing business, and your company must have a registered agent in your state of formation as well as each of the states in which you foreign qualify.

Note: MaxFilings always advises you to consult with a professional who is familiar with all current laws and regulations that are applicable in your jurisdiction. And always seek the advice of a qualified “accountant”, “tax advisor” or “financial planner” when addressing tax issues. They are not only very complex but they are also subject to interpretation.