Advantages:
- Delaware is considered the most attractive state in the nation for organizing.
- Delaware courts have a reputation of reaching reasonable and fair conclusions when construing the corporation laws.
- Only one incorporator is required. A corporation may be the incorporator.
- There is no minimum capital requirement.
- The franchise tax compares favourably with that of other states (usually $30/year).
- For companies doing business outside of Delaware, there is no corporation income tax.
- Delaware has no sales tax, personal property tax or intangible property tax on corporations.
- No taxation upon shares of stock held by non-residents and no inheritance tax upon non-resident holders.
- A Corporation may keep all of its books and records outside of Delaware.
- You may have a principal place of business/address outside of the State of Delaware as well.
Regarding the Federal taxes: if you are US citizen or US resident (US taxpayer) and you file taxes in the US, a LLC is treated as a partnership and is not subject to corporate income tax.
Any profits or losses are passed through to the members of the LLC to report on their personal income tax.
Therefore, The LLC DOES NOT PAY ANY INCOME TAXES!
COMPANY FORMATION
Procedure to form:
- Corporation: Filing of Articles of Incorporation or Certificate of Incorporation with the Secretary of State.
- LLC: Filing of Articles of Organization or Certificate of Formation with the Secretary of State.
Language of legalization and corporate documents
English. If any other language is used it must be accompanied by a translation in English.
Registered office required
Yes. Must be maintained in state of incorporation/formation at the office of a professional registered agent.
Shelf companies available: Yes
Time to incorporate/form
Generally 2 days, but must allow an additional 5 – 7 business days for delivery of documentation.
Name restrictions
Corporation: Anything identical or similar to an
existing company within the state of incorporation. Additionally, the
use of bank or trust within the name of the corporation is prohibited in
all 50 states without first obtaining consent from the banking
authorities in the state of incorporation.
LLC: Anything identical or similar to an existing company within the state of formation. Additionally, the use of bank, trust, insurance or reinsurance within the name of the LLC is generally prohibited in all 50 states. This is because limited liability companies in most states are simply not allowed to engage in a banking or insurance business.
Language of name
The name can be in any language. Some recommended states require an English translation.
STRUCTURE OF MANAGEMENT
Directors/managers
Corporation: The minimum number of directors is one,
who must be a natural person. Directors may be of any nationality and
need not be a citizen of the United States.
LLC: One manager either a natural person or a body corporate of any nationality.
Shareholders/members
Corporation: The minimum number of shareholders is one.
A shareholder of a US Corporation may be another corporation (even an
international or “offshore” corporation).
LLC: The minimum number of members is two. This number
(or greater) ensures automatic tax classification as a partnership, the
advantages to which are described above under “Taxation”.
