Why Should I Incorporate in Delaware?

The reason most people incorporate when they are starting a new business is to protect their personal assets so that all of their business and personal belongings remain separate and apart.

The State of Delaware is a leading domicile for U.S. and international corporations.
More than 850,000 business entities have made Delaware their legal home. More than 50% of all publicly-traded companies in the United States including 63% of the Fortune 500 have chosen Delaware as their state for incorporation. Businesses choose Delaware for many reasons.

The Delaware General Corporation Law is the most advanced and flexible business formation statute in the nation.
The Delaware Court of Chancery is a unique 215 year old business court that has written most of the modern U.S. corporation case law.

You do not need an attorney to register a company in Delaware. You need a registered agent.

Corporations are also required to perform certain formalities such as holding annual meetings and keeping detailed corporate records (minutes), however, corporate meetings and records can be held and kept anywhere in the world.

  • “C” Corporation
  • “S” Corporation (reserved for people who have an SSN and pay a IRS Tax Return)

Limited Liability Companies (LLC). Offers the same personal liability protection as a corporation but with fewer of the corporate formalities. The Limited Liability Company or LLC has been a traditional form of business structure in Europe and Latin America. The LLC was first introduced in the United States by the State of Wyoming in 1977 and authorized for pass-through taxation (similar to partnerships and “S” Corporations) by the IRS in 1988. With the recent inclusion of Hawaii, all 50 states and Washington, D.C. have now adopted some form of LLC legislation for both domestic and foreign (out of state) Limited Liability Companies.

  • If you are the only member of the LLC, by IRS standards you are considered a Single-Member Limited Liability Company and cannot file a partnership tax return with the IRS.
  • Unless you apply to the IRS for classification as either a “C” Corporation or an “S” Corporation you will initially be classified as a disregarded entity for the purposes of filing a federal tax return and must file a Schedule C on your personal tax return. As an International client since you do not file a personal tax return you can only be classified as a “C” Corporation.

Note: In the state of Delaware the maintenance on a corporation with authorized stock of 1500 shares at no par value is only $225.00 as opposed to an LLC which is $300.00 per year.

What are the Benefits of Incorporation in Delaware?

  • One person can hold all the offices of President, Treasurer and Secretary and be the sole director.
  • Most states require a minimum of three people to hold offices in a corporation.
  • There is no minimum amount of money required in a company bank account.
  • The States corporation and trust laws are known for their unparalleled flexibility regarding freedom of contract.
  • The annual franchise tax is very favorable and can be as little as $100 Per year including all filing fees.
  • There is no inheritance tax on stock held by non-residents of Delaware.
  • There is no estate tax on shares of stock held by non-residents.
  • There is no State income tax for Delaware corporations who do not operate within the State.
  • There is an established body of laws which protect the Corporations in Delaware. Shares of stock owned by individuals outside the State are not subject to any Delaware taxes.
  • The director has the power to make or alter by-laws.
  • Directors may fix any price on shares of stock they wish to sell.
  • Recent legislation limits abusive takeover tactics
  • Corporations can become Sub-chapter “S” if all qualifications are met.
  • Shares of stock owned by individuals outside the State are not subject to any Delaware taxes.

Why Should I Select Delaware For My New Company?

The State of Delaware is a leading domicile for U.S. and international corporations. More than 850,000 business entities have made Delaware their legal home. More than 50% of all publicly-traded companies in the United States including 63% of the Fortune 500 have chosen Delaware as their state for incorporation.

What is the Difference between a Corp and an LLC?

Both corporate entities are excellent choices for business owners looking to minimize their personal liability and build greater credibility. Each entity offers distinct tax and business advantages. Choosing the right one depends on the specific needs of the business. Corporations offer

  • Personal liability
  • Tax savings
  • Increased opportunities for raising capital
  • Personal liability protection for owners
  • Taxed at corporate and individual level
  • Formal meetings and corporate minutes
  • Annual state reports
  • No membership restrictions

Limited Liability Company offers

  • Personal liability protection for owners
  • Income/loss passed directly to shareholders
  • Formal meetings and corporate minutes
  • Annual state reports
  • Membership restricted to 100 shareholders

Disadvantages of Corporations

  • Required to hold formal meetings or keep detailed corporate minutes
  • Offer great tax flexibility
  • Income/loss passed directly to members

Disadvantages of a Limited Liability Company

  • Can option to be taxed as either a traditional corporation “C” or “S” or as a “pass-through” entity and file a partnership return if they have two or more members
  • Personal liability protection for owners
  • No membership restrictions

Why is Delaware known as the “Incorporation Capital of the World.”?

The State of Delaware is a leading domicile for U.S. and international corporations. More than 850,000 business entities have made Delaware their legal home. More than 50% of all publicly-traded companies in the United States including 63% of the Fortune 500 have chosen Delaware as their state for incorporation.

Businesses choose Delaware for many reasons. The Delaware General Corporation Law is the most advanced and flexible business formation statute in the nation.
The Delaware Court of Chancery is a unique 215 year old business court that has written most of the modern U.S. corporation case law.

What Is A Registered Agent? Do I Need One?

The registered agent is responsible for receiving important legal and tax documents on behalf of the business. Service of Process (sometimes called notice of litigation), which is the document that initiates a lawsuit, is served to the registered agent for a business. Proper handling of and timely response to this document are vital, as not doing so can result in significant adverse consequences to the business. Additionally, the registered agent often receives mail and tax documents from the state and government on behalf of business. Timely handling of these documents is also important as states typical impose deadlines for annual report and franchise tax payments.

Which Type Of Legal Entity Formation Is Right For Me?

Before deciding which type of corporation best suits your business needs, always consult with your legal or financial advisors. Global Corporate Services, Inc. is a registered agent in the State of Delaware and does not offer legal or tax advice. We are here to help you start your new business as quickly and cost effectively as possible.
For more detailed information, please be sure to speak with a qualified legal and/or financial advisor. You may address your questions to our Tax and Accounting Services at tax@delawarecorp.net.

General Corporation
The general corporation is the most common corporate structure. This type of corporation is a separate legal entity that is owned by stockholders. A general corporation may have an unlimited number of stockholders that, due to the separate legal nature of the corporation, are protected from the creditors of the business. A stockholder’s personal liability is usually limited to the amount of investment in the corporation and no more.

Sub-Chapter “S” Corporation
With a sub-chapter “S” corporation you can deduct the profits and losses from your corporation on your personal tax return. You will no longer be considered a “C” Corporation. Prior to March 15 you must file an IRS Form 1120-S. To qualify as a “S” corporation, you must be a US citizen or qualified resident filing a personal tax return with the IRS.

Close Corporation
There are a few minor, but significant, differences between general corporations and close corporations. In most states where they are recognized, close corporations are limited to 30 to 50 stockholders. In addition, many close corporation statutes require that the directors of a close corporation must first offer the shares to existing stockholders before selling to new shareholders.
This type of corporation is particularly well suited for a group of individuals who will own the corporation with some members actively involved in the management and other members only involved on a limited or indirect level.

Non-Profit Corporations  
Formed for charitable, scientific, religious or educational purposes, etc. If the corporation is to qualify for tax exempt status by donations then it has to qualify with the IRS. Sometimes they are referred to as 501(c)(3) corporations. Without the IRS qualification any donated funds will not be considered a tax free exemption.

What is a “C” Corporation?
The general corporation is the most common corporate structure. This type of corporation is a separate legal entity that is owned by stockholders. A general corporation may have an unlimited number of stockholders that due to the separate legal nature of the corporation, are protected from the creditors of the business. A stockholder’s personal liability is usually limited to the amount of investment in the corporation.

What is a “S” Corporation?
With a sub-chapter “S” corporation you can deduct the profits and losses from your corporation on your personal tax return. You will no longer be considered a “C” Corporation. Prior to March 15 you must file an IRS Form 1120-S. To qualify as a “S” corporation, you must be a US citizen or qualified resident filing a personal tax return with the IRS.

What is a Not for Profit Corporation?
Non-Profit Corporations are formed for charitable, scientific, religious or educational purposes, etc. If the corporation is to qualify for tax exempt status by donations then it has to qualify with the IRS. Sometimes they are referred to as 501(c)(3) corporations. Without the IRS qualification any donated funds will not be considered a tax free exemption.

What is a Limited Liability Company?
The Limited Liability Company or LLC has been a traditional form of business structure in Europe and Latin America. The LLC was first introduced in the United States by the State of Wyoming in 1977 and authorized for pass-through taxation (similar to partnerships and Corporations) by the IRS in 1988. With the recent inclusion of Hawaii, all 50 states and Washington, D.C. have now adopted some form of LLC legislation for both domestic and foreign (out of state) Limited Liability Companies.

What is a Limited Partnership?
Unlike general partnerships, LPs can limit the liability and the involvement of certain partners. This is useful for attracting investment partners who might like to participate in the profits of the business but not necessarily its risks or daily operations.

What is a Series LLC?
The Delaware Series LLC Act provides for the creation of separate “series” within an LLC whose debts and other liabilities are enforceable against that Series alone. The Act also provides that classes or groups of members can be established, having whatever rights the LLC agreement says they have. The combination of the two provisions allows a Series to be treated in many ways as a separate LLC. Thus, the Series provisions in the Delaware LLC Act allow for the creation of separate protected “cells” within one limited liability “container” without the need to create separate entities, thus avoiding the inefficiencies associated with multiple related entities. The concept is similar in function to the segregated portfolio companies and protected cell companies designed for the mutual fund and captive insurance industries in Bermuda, Guernsey, the Cayman Islands, Mauritius and Belize.

What Is A Registered Agent? Do I Need One?

The registered agent is responsible for receiving important legal and tax documents on behalf of the business. Service of Process (sometimes called notice of litigation), which is the document that initiates a lawsuit, is served to the registered agent for a business. Proper handling of and timely response to this document are vital, as not doing so can result in significant adverse consequences to the business. Additionally, the registered agent often receives mail and tax documents from the state and government on behalf of business. Timely handling of these documents is also important as states typical impose deadlines for annual report and franchise tax payments.

What Is An EIN?

The EIN is issued by the IRS to operate your business. It is similar to a SSN for an individual. Only one EIN is ever issued to a Corporation or an LLC. An EIN is necessary for a Corporation or LLC to open a bank account and file income tax.

How Do I Get An EIN (Federal ID Tax Number). Do I need one?

You can either apply for the EIN directly to the IRS using the application Form SS4 or hire us to get one for you. If you do not have a SSN you can hire a Professional Director who will apply to the IRS on your behalf.

Each year in January you will receive a bill for the $90 registered agent fee, if non US a $35 air mail deposit for mail forwarding fee and either the state of Delaware Franchise Tax or Annual Report if an LLC.

Do I Need To File My New Delaware Corporation or LLC in My Home State?

The answer will depend on the type of business you are operating. Call us for a free consultation.

How Do I File my Foreign Corporation in the State of Delaware?

Are you expanding your business to another state?
Many states require that you file a Foreign Qualification or Certificate of Authority to do business in their state.
We can qualify and file your corporation or LLC in all 50 states. Call for a free consultation.

How do I protect my assets when I purchase an Airplane?

To protect your assets you might want to own your aircraft as a Delaware corporation. A Delaware corporation gives you:
• asset protection
• privacy
• tax savings

How do I protect my assets when I purchase a Yacht?

To protect your assets you might want to own your Yacht as a Delaware corporation. A Delaware corporation gives you:
• asset protection
• privacy
• tax savings

If I am not a US Citizen can I own a Delaware corporation and legally do business in my own state?

Delaware does not require owners of either a Corporation or LLC to be a citizen of the US. As an International client we can file a Corporation with you as the only owner

If I am not a US Citizen can I register my aircraft or yacht in the US?

These are very specific areas. You can register your Yacht in Delaware as a non citizen but you cannot document with the USCG unless you hire a Professional Director.

  • If you fly your airplane 60% of the time in the US the FAA will issue your Delaware “C” corporation only (no LLC) an “N” Number as long as you identify yourself on the FAA application as a non US citizen.
  • Please read and understand our Trust Package available through our partner Asset Managing Group, Inc.

Why Select eCorporation Legal Services as your Registered Agent?

Our Resident Agent fee includes First Class mail forwarding in the United States. For our international clients, we only ask for a small deposit to cover Air Mail forwarding. We do not charge repackaging fees or fees to bring the mail to the postal service.

How Do I Start the Incorporation Process?

You can either file our online application by clicking the Tab on our website, send us an email to contactus@delawarecorp.net or call us for a free consultation.