Delaware LLCs offer their owners considerable flexibility, as they can be taxed as sole proprietorship, S Corporation or C Corporation depending on how their owners decide to structure them. There is no maximum number of members, making expansion easier – adding new ones is possible at any time!
Many entrepreneurs choose either self-filings or professional online formation services for filings, with many offering reliable processes, registered agent add-on features and same-day document delivery services.
Company Secretary
Company Secretaries are corporate officers tasked with signing documents and keeping company records up-to-date, usually listed in the Certificate of Formation filed with the state. Additionally, an LLC Operating Agreement may include such an officer; their responsibilities can also include any duties stipulated by its Members.
Delaware business entities typically establish their terms of ownership, operation, and management through an operating agreement, either written or verbal. Such an agreement may include transfer restrictions that prevent Members from selling their membership interests to third parties; as well as indemnification/advancement rights that provide presumptions against indemnitees that make rebutting these presumptions difficult.
As opposed to Corporations, changing the Board of Directors in an LLC typically does not require filing an amendment with the state of Delaware. However, certain transactions (such as opening a bank account) may necessitate filing of a Certificate of Incumbency by the company.
Registered Agent
A Delaware LLC’s Registered Agent serves as its representative for service of process and official correspondence, receiving letters on its behalf during normal business hours from any government agencies or residents who contact it with official matters related to its operations. They must reside or conduct business legally within Delaware. The Registered Agent should have access to a street address rather than a P.O. box to receive service of process as needed from official channels on behalf of its members or creditors.
Although Delaware law allows owners to act as their own Registered Agent, this practice should generally be avoided. When someone acts as their own Registered Agent, their address appears publicly in Certificates of Formation filed with the Division of Corporations – making this information searchable by anyone online. Additionally, other websites could download those records and republish them themselves, thus making the data easily searchable by anyone.
Northwest Registered Agent is the top choice when selecting a Delaware Registered Agent, offering a privacy package to protect directors’ personal data. Their US-based customer support team comprises former lawyers, accountants and small business owners so they have an in-depth knowledge of what entrepreneurs require in order to thrive.
Members
Delaware LLCs are owned by members, which may include natural persons as well as legal entities like corporations, partnerships or other LLCs. There are no restrictions on the number of members in a Delaware LLC and membership can be freely transferred between members; any change to ownership should be documented in an operating agreement for your LLC.
An LLC’s operating flexibility and superior liability shield make it the superior choice in many business arrangements. While corporations must adhere to state statutes for many of their activities, an LLC can set its own flexible rules through an operating agreement contract.
Conversely, corporations’ rights and liabilities for shareholders, directors and officers are governed by state law as well as by-laws of their business entity. A Delaware LLC can choose whether it will be taxed like a C corporation (with double taxation for both corporate profits and personal income), an S or partnership structure for income taxation; making them more suitable options for small businesses.
Managers
As with the Directors, managers in a Delaware LLC may consist of individuals or entities. Members can elect to waive fiduciary duties of these Managers in order to give them more freedom when running the company – this practice is particularly prevalent among private equity deals.
As contract-makers, members can use an LLC operating agreement to limit or waive fiduciary duties typically imposed upon those who control an entity; such as loyalty and care duties. Delaware courts take an expansive interpretational approach in identifying expressly contracted-for fiduciary duties.
Imagine that a real estate investor owns properties through a Delaware limited liability company and sets up another Delawarean limited liability company as its manager and to own California properties of said first one. By doing this, he doesn’t need to register the second firm as a foreign LLC in California nor file its address or name on Statements of Information.
