If your business operates from outside Delaware, such as an LLC formed outside its borders and conducting operations here, registration with Delaware must take place as part of a process known as foreign qualification.
Registration requires additional filings, fees and tax obligations yearly; however, Delaware stands out among business-friendly states as it doesn’t impose income, local sales or value-added taxes.
Registration
As soon as a foreign LLC registers in Delaware, it must fulfill licensing and tax requirements in order to remain active. Furthermore, should contracts or legal documents that require an Employer Identification Number (EIN) require one, otherwise members’ personal Social Security numbers could be at risk from identity theft and used against them in litigation proceedings.
Delaware foreign LLCs should appoint a registered agent in Delaware and create an operating agreement that details how the business will be run and each member’s financial contributions and duties. An operating agreement also helps protect personal assets from debts and liabilities that might accrue to an LLC through separation. It should be kept as part of its records. Registering an LLC typically takes several weeks; an expedited service for $75 can speed up this process.
Taxes
Delaware stands out from the pack by not imposing state income or gross receipts taxes for businesses without physical presence in Delaware; instead, all businesses (including foreign LLCs) are required to pay an annual fee to cover administrative costs in this state.
If your company employs any employees, worker’s compensation insurance provider registration is mandatory. There are different rates based on what work your business performs and the size and number of staff in its employ.
Your state also requires registration of any fictitious business names used (commonly referred to as trade, business or DBA names) you use in its database of names available for search on its website; registration processes vary by county; however there is a small filing fee associated with each registration process. Your business can act as its own registered agent in most states (this option being allowed in many) or you can hire third-party services like Incfile for an affordable registration service fee.
Registered Agent
When forming a Delaware foreign LLC, several forms must be filled out and submitted – these will depend on what kind of business entity you’re registering (corps file a Certificate of Registration; LLCs need to submit Certificates of Existence). You’ll also need to provide Delaware registered agent service information.
A registered agent serves as the point-of-contact between your company and third parties that serve legal documents on it, and any important communications. Their details must be included with your registration filing with the Delaware Division of Corporations; additionally, they should generally be available during regular business hours to accept service of process and any communications for your company.
Your foreign LLC could use your home address as its agent if you are its sole member or manager; however, this isn’t recommended as using a registered agent service such as IncParadise will ensure your sensitive registered agent data stays private.
Requirements
As is the case for any business, an LLC requires meeting all state regulations – this includes paying taxes and meeting license requirements. Furthermore, opening a bank account specifically for your LLC ensures it can have its own separate finances instead of mixing them up with any personal assets.
Delaware registered agents are another key requirement when setting up a company in Delaware. They serve as the point-of-contact for official government notifications, tax forms and legal documents that need to be filed by your business in Delaware. They should possess physical addresses within the state as well as accept service of process when needed.
Name your Company Correctly It is essential that your company name be distinguishable from all others and comply with federal and state trademark laws, so before choosing one conduct a trademark search before finalizing your choice. Failing this may necessitate foreign qualifying in Delaware as you would need a Foreign Qualification certificate from them in order to operate there legally.
