Delaware stands out as an extremely business-friendly state, offering tax breaks and the option to pass-through income to shareholders.
Delaware provides flexibility with regard to legal structure and regulation, so many companies choose it as the location for incorporation.
Benefits
Delaware remains one of the top destinations for companies looking to form Limited Liability Companies (LLCs). Its renowned tax advantages continue to draw more businesses there.
Delaware is also unique in that it allows LLCs to be taxed as sole proprietorships, partnerships, S-corporationss or C corps depending on which election benefits their business the most, helping save more money over time.
LLCs may opt to be fiscally transparent, where profits pass through the LLC and are taxed individually at each member’s level – this may be particularly helpful if the LLC consists of non-US residents generating income outside of America.
Delaware LLCs also benefit from having access to a streamlined legal system for litigating business disputes. The Delaware Court of Chancery offers exclusive business law cases, and has numerous precedents that may help speedily and efficiently settle your claim.
Taxes
As soon as you establish a Delaware LLC with bank account, there will be several state and federal tax obligations you’ll need to abide by, such as franchise tax, corporate income tax and any additional annual charges.
For assistance in understanding your taxes, hire a tax lawyer familiar with Delaware LLC tax laws who can guide your approach in paying the correct amount of taxes.
Your business activity could require you to pay a Gross Receipts Tax of between 0.0945% to 7.4681% of its gross receipts tax (ranging from 0.0945% to 7.4687% depending on its nature), as well as file an annual report – though neither are legally mandated requirements.
As previously discussed, in addition to state taxes in Delaware, some local municipalities charge additional taxes such as city wage tax or property taxes. More information about these levies can be found at Delaware’s Division of Revenue website.
Requirements
Establishing a bank account for your Delaware LLC is one of the key aspects of running it successfully. A bank account allows customers to pay you, manage your finances and process payroll more easily.
Your Delaware LLC must fulfill a set of criteria in order to open a bank account, such as providing member, manager and officer identification certificates that have been notarized or certified by Kaizen.
Your business must also possess an Employer Identification Number (EIN). An EIN can be obtained from either Incfile or IRS and should be unique for your entity.
Your LLC must also have a distinguishable name filed with the Delaware Secretary of State. Selecting an appropriate name is key for company success, so consulting a Delaware LLC attorney could be helpful.
Once you’ve selected a name for your company, the next step should be registering it with the Delaware Division of Corporations. This can be accomplished online or via postal service depending on your preference and needs.
Fees
No matter if it’s for your Delaware LLC or another state entity, it is crucial that you understand all the fees involved with opening an account – this could include formation costs, ongoing taxes and more.
Before selecting a bank, it’s essential to carefully consider both your budget and desired services. Certain banks cater specifically to small business owners with strong banking features and physical branch locations while others focus on offering convenience online.
As a rule of thumb, it is advisable to seek a bank that provides both online and offline banking options – this will give you access to multiple resources while making managing finances simpler.
Formation of an LLC in Delaware is relatively simple and cost-effective, with filing the Certificate of Formation form (either electronically or printed and mailed back), along with paying a filing fee of $90.
