One of the wisest decisions a business owner can make is forming a Delaware LLC. This low-cost and flexible entity offers numerous advantages and legal protections for both your company and personal assets.
A well-drafted operating agreement is an essential document to have before starting your business venture. This can help resolve disputes between owners and keep your organization running efficiently.
Legal Name
When forming your Delaware LLC, the legal name should be what you file with the Secretary of State. It should be easily distinguishable from other business names and include words required by Delaware LLC laws.
Delaware LLCs must abide by certain restrictions when advertising their business activities, such as refraining from any language that implies they are banking or financial institutions, affiliated with either local or federal government agencies, or organized for unlawful purposes. Furthermore, any variation of “bank” must be avoided without approval from the Delaware Department of Banking and Securities.
To guarantee that your desired business name is available in Delaware, conduct a business name search. The Delaware Division of Corporations offers two tools that will let you search for existing businesses with similar names and assess whether the proposed one can stand alone as distinct.
Registered Agent
In Delaware, every LLC must have a designated registered agent. This individual or company serves as the point person who receives official state correspondence on behalf of the LLC.
Registered Agents must have a physical office or residence in the state where they can accept and sign for notifications from the government regarding any company business activities. Furthermore, Registered Agents must be accessible to accept and forward all received legal documents throughout regular business hours, regardless of when they were received.
They must also meet all state statutory requirements. Failure to do so could lead to legal problems for your company and could incur fines and penalties as a result.
Northwest Registered Agent provides a wide variety of Delaware LLC services and they are the only registered agent in the state that sends compliance deadline filing alerts with every piece of mail they receive on your behalf. Furthermore, their customer service team takes time to listen to your problem instead of simply cutting you off with little interest in what you have to say.
Annual Reports
If you own a Delaware LLC, filing annual reports is an easy process that can be done online through the Secretary of State’s Division of Corporations website.
Corporations, limited liability companies and nonprofits all require filing an annual report.
In most states, businesses must file an annual report in order to stay open and avoid closure or liquidation. The requirements for these documents vary by entity type, including filing dates and tax amounts.
Domestic corporations pay $50 annually, while nonprofits pay $25. In addition to these fees, you must also pay the franchise tax.
Taxes must be paid online with either a credit card or checking account and due by June 1. Failure to make your payments by this deadline will incur an additional $200 plus 1.5% interest per month.
Taxes
Delaware LLCs are unique entities, combining the features of both corporations and partnerships or sole proprietorships. This provides for greater tax efficiency as well as other advantages.
Delaware LLCs are typically pass-through entities for federal income taxes, meaning their members pay taxes at the individual level rather than at the corporate level.
One of the major advantages of Delaware LLCs is their liability protection for owners. If one member gets a judgment against them, it won’t be enforced against their personal assets.
Delaware LLCs have four main tax treatments: partnership by default; S corporations or C corporations as the default treatment; or C corporations may elect not to be included for taxation purposes. Research the different tax statuses thoroughly to find which one best suits your business requirements.
