Delaware provides numerous business incentives and has an efficient process for domesticating foreign LLCs.
LLCs allow members to transfer ownership freely by means of an Operating Agreement.
Creditors cannot seize personal assets of members in an LLC when it dissolves; this is known as limited liability protection.
Taxes
As your company relocates or changes states of incorporation, there are some tax implications you’ll need to be mindful of. For instance, if your company employs staff they will require workers’ compensation insurance and registration with the state for an Employer Identification Number (EIN).
Some types of businesses in Delaware require licenses or permits from state and local agencies. It is best to contact these authorities directly in order to ascertain which licenses apply to you.
Many business owners choose Delaware due to its strong legal infrastructure, including the Court of Chancery and extensive case law. Furthermore, Delaware does not levy an income or gross receipts tax and does not tax intangible assets like intangible rights; however it has an exorbitant corporate tax rate requiring an annual franchise tax payment of $300 and additional sales property and excise taxes may also apply depending on your type of business activity.
Licensing
Delaware is well-renowned for its corporate law. Businesses frequently utilize this state to form limited liability companies (LLC), the most prevalent business structure in America. Furthermore, Delaware laws are extensively studied at law schools around the nation.
State law mandates that you select a registered agent for your LLC. This person will accept service of process and official mail on your company’s behalf and should maintain office hours from Monday-Friday with regular availability during normal business hours.
One of the primary advantages of moving an LLC to Delaware is its ability to protect members’ privacy. Delaware’s incorporation laws provide you with protection from having your identity exposed publicly – something entrepreneurs and small businesses will find especially advantageous. Furthermore, Delaware provides various tax incentives including research and development tax credits, green industries/brownfield tax credits capital access programs and EDGE grants – offering even further potential advantages when making this move.
Business Formation
Delaware is an ideal state for startups and new businesses due to its wide array of tax and business incentive programs and its straightforward process for creating an LLC.
One of the first steps in creating an LLC is choosing its name. Your selection must contain “limited liability company” (LLC) in its title and be distinguishable from existing names on file with the Division of Corporations. Furthermore, it would be prudent to reserve this name for 120 days as it could otherwise become unavailable later.
As part of creating your LLC, it will also be necessary to select a registered agent. Your registered agent must reside or conduct business within Delaware; LLCs are allowed to act as their own registered agents while Incfile offers one year free registered agent service when submitting paperwork for formation.
Business Operations
Delaware provides many business-friendly advantages beyond its advantageous corporate law and tax policies, such as reduced reporting requirements and an easier legal structure. Other notable business advantages in Delaware are professional networking opportunities, reduced reporting requirements and simplified legal structures.
As part of starting up a Delaware LLC, one of the initial steps involves obtaining an Employer Identification Number (EIN). An EIN is issued by the IRS to recognize your LLC as a separate business entity for taxation and filing purposes, and can be done online through Delaware’s Division of Corporations website.
At the same time, it is highly advisable to draft an LLC operating agreement, which outlines how your business will run internally and will help maintain its limited liability status. You might also wish to register your name as “doing business as” (DBA) with your county of operation for added protection in case anyone sues due to wrongdoing committed by your LLC.
