An LLC provides asset protection when investing in real estate; however, there may be costs associated with forming and managing it.
DIY LLC formation or use an online service with features like registered agent services and same-day document delivery typically costs less than using an attorney.
Articles of Organization
Delaware LLCs must file articles of organization with the Division of Corporations in order to legally establish their business entities, in order to receive an Employer Identification Number, open bank accounts and conduct business operations. These documents should also include information such as business name, address and signature from an organizer.
An LLC must appoint a registered agent; this individual or company will receive legal papers on behalf of their LLC and submit them for legal processing. Their identity and address are made public via state databases; additionally, the registered agent must either reside within Delaware’s borders or be approved to conduct business there.
An operating agreement isn’t mandatory in Delaware, but is highly recommended. It will detail your company’s ownership structure, member responsibilities and managers responsibilities, among other vital details that help preserve an LLC’s limited liability status by showing it is separate entity.
Registered Agent
An LLC’s registered agent is defined as any individual or business located in Delaware who receives legal documents and tax notices on its behalf, accepting service of process during regular business hours. An LLC may appoint their own registered agent, or use one of many online services that offer this service.
Delaware LLCs must submit an annual report, outlining key information about their company. You can find this form and instructions either directly from the state website or from an online filing service like Incfile, ZenBusiness, Swyft Filings or LegalZoom.
Delaware provides many advantages to businesses, with the formation of LLCs proving particularly advantageous. But doing so properly requires careful planning and compliance with state law – for optimal results work with a registered agent and attorney during this process. Once an LLC is formed you can open bank accounts and business credit cards as necessary to protect personal assets from those belonging to the business and obtain an Employer Identification Number (EIN) to satisfy federal employment tax obligations.
Annual Report
An annual report must be filed by Delaware LLCs with the state. This includes providing details about their name and address as well as directors/officer information and franchise tax (domestic only). There is a filing fee of $50 plus an annual franchise tax payment of $300.
An LLC with limited liability must maintain their limited liability through having a registered agent in Delaware. A registered agent provides both physical and email access points that can be used to serve legal process, notices and serves as point of contact for their LLC – helping ensure it fulfills all state obligations without incurring costly fines or fees.
If you are forming an LLC and require a Delaware registered agent, consider one of the many online services such as Incfile, ZenBusiness, Swyft Filings or Northwest Registered Agent. These providers will offer peace of mind at an economical cost.
Taxes
Delaware LLCs must pay both California annual franchise tax and Delaware annual franchise tax to operate lawfully within California. They must also file for Foreign Qualification in order to do business there legally.
Some businesses choose to convert to a Delaware LLC to attract investors or venture capitalists, who prefer them due to their strong startup ecosystem and business-friendly regulatory and legal environment.
Converting can also provide additional liability protection or reduce administrative costs, but conversion can be complex and costly. Before making your decision to convert, speak with an experienced attorney who can determine if this is indeed the right solution for your business – often times it isn’t. A simpler alternative could be setting up a Delaware Statutory Trust (DST). A DST offers increased protection while cutting administrative costs and taxes significantly.
