Why Delaware LLC or Corporation

Why Delaware is One of The Best States To Form Your Business

The state of Delaware offers some distinct advantages for businesses above and beyond the average state in the country, that causes one to most certainly consider forming a Delaware LLC or Corporation.

Delaware LLC's and Corporations:

• No corporate income tax on foreign corporations or llc's
• Personal income taxed in lower tiers
• No sales tax (Gross receipts tax for businesses do apply)
• No property tax (County tax does apply while some relief programs do exist)
• No gift tax
• No inheritance tax
• No inventory tax
• Relatively low franchise tax
• Relatively low tax on corporate or member shares
• Very low payroll taxes
• Maximum privacy
• No restricting government regulation

# (Delaware does maintain a public list of delinquent tax payers)

MASSIVE DELAWARE ADVANTAGES

• Unlimited Issuance of Shares of Stock - In Delaware you can issue an unlimited number of shares of stock. Delaware does have a franchise tax based on outstanding shares so consider the financial consequences of unlimited stock issuance. But on the other hand this can make a huge difference in the end for generating a public stock offering of the company.
• One individual For Every Office - In Delaware one person can be the director, president, secretary, treasurer, vice-president, ceo, coo, of a corporation or all members, managers of an llc. This gives one the definitive level of flexibility and control with respect to building an managing a company at least as an option.
• Privacy and Anonymity - No disclosure of individuals do need to be made but do keep in mind that the actual business address and location of meetings will be public records.
• Minimal Formalities and Government Restrictions — Much like the other preferred business states, as discussed in a previous post, if you are looking for less restrictions then this is one of the states for you to consider.
• Low Annual Fees - Assuming that you are a foreign company, you will pay $300 plus the franchise tax based on outstanding shares as previously mentioned. There is a calculator on the state website for calculating the franchise tax due based on their bracket system to 5,000 shares and then a nominal increase above and beyond the 5,000 shares.
• No Individual Liability For Corporate Debts - The scope of the law within the state is essentially and generally that provided no willful violation of the law has ensued, that an individual cannot be held liable for corporate debts.
• Zero Minimum Capitalization Required - Your LLC or corporation can be funded with as little as $1 to as much as you desire. Of course this lends itself to a greater level of control and flexibility in as much as you and only you will dictate the levels of funding that your business maintains as the state regulates no criterion for what is an appropriate funding level.
• Corporate Meetings Can Be Held Anywhere - You can literally run your business without ever stepping into the state of Delaware. To be considered is that fact that your foreign place of business and as well your meeting places will be a matter of public record.
• Fortune 500 Haven - The state of Delaware is a longstanding mecca for Fortune 500 companies as investors and especially foreign investors have become very comfortable with investing in Delaware corporations as more than 60% of Fortune 500 companies are Delaware corporations. Today more than one million companies are Delaware companies. This is not too shabby for such a tiny little state.
• Delaware Business Court System - Delaware has its own unique court system for businesses called Court of Chancery that massively streamlines and cuts costs and red tape for the purposes of overall benefit to businesses.

Photo from aggressivedrivingonline.com

**Remember each and every Corporation and LLC actually exists and resides within their bylaws or operating agreement which is the heart and soul of a corporation or llc. Without good, solid by-laws or operating agreement, you really do not have a corporation or llc. 

***This blog is for educational purposes only and as such you are advised to seek out and consult with your legal and tax advisors prior to engaging in any decision making affecting your business.