To be able to enter one of the world's largest markets, a company must be registered in the state of Delaware. This state has fairly loyal legislation in regards to non-resident foreign entrepreneurs who want to open a business in Delaware.
Delaware's corporation laws were only changed in the early 1900s; prior to that, forming a corporation in that state required congressional approval. Everything is changing, including the laws - at the time, it was one of the states that allowed you to register a company in the United States quickly and without having to wait for the necessary state permissions. It is now a popular state among entrepreneurs looking for a suitable location to register an American business.
We will go over all of the features and requirements of registering a company in the state of Delaware in detail below.
The following are the primary advantages of incorporating in Delaware:
- The business environment is ideal for the formation of commercial activities.
- A wide range of regulations are available to meet your requirements.
- The ability of a non-resident to form a corporation in Delaware.
- Tax rates are low in comparison to other states.
- The minimum document requirements and the presence of a register of legal entities facilitated and accelerated the process of registering a business in the state of Delaware.
- Annual corporate reports are submitted electronically.
Starting a Delaware Corporation: Business Types
Entrepreneurs in Delaware can choose from several basic legal types when forming a new company:
The distinction between LLCs and corporations is that the corporation system requires resolutions and shareholder meetings, as well as registration and submission of meeting minutes, which confirm that issues are resolved in the voting process. LLCs, on the other hand, have a more adaptable structure. Corporations are taxed as C-corps by default, but they can be registered with the IRS to pay S-corp rates.
The rate of corporate taxation is as follows:
- C-corps: 21%
- S-corporations: 20%
Companies can also deduct investment losses on their income tax returns.
Before deciding on the type of corporation that best suits your type of activity, you should thoroughly research each of them:
Forming an LLC in Delaware
Remote registration of an LLC in Delaware is possible. The existence of an agreement, which is prepared following the registration of a company in the state of Delaware, is required. The most common type of incorporation is a corporation.
The first step in forming an LLC in Delaware is deciding on a name, and certain legal terms and conditions must be followed. There is a formula: a unique name followed by "LLC" at the end. Advance reservations are available on the Trade Names website.
Because business names and logos are the intellectual property of companies, it is worth checking the uniqueness of the name you have chosen on the website of the US Patent and Trademark Office to avoid subsequent legal claims. In Delaware, you can register a trademark by submitting an application to the appropriate organization.
The appointment of a registered agent is required for the formation of new LLCs in Delaware (as in most territorial-administrative divisions). His duties include communicating with regulatory authorities and obtaining legal documents on the company's behalf. An individual or legal entity must have the appropriate authorization to act as a registered agent. One of the requirements is that the office have a registered physical address in the state of Delaware. Any change in business name or registered agent requires the filing of a Certificate of Change and the payment of a fee of $50.
The next step in forming a Delaware LLC is to register with the federal government and obtain an EIN number from the IRS in order to pay taxes. These documents are required when a Delaware company hires employees or opens a bank account.
Creating a Delaware C-corporation
It is a distinct legal entity that is owned by shareholders. When registering a C-corporation in the state of Delaware, there are no restrictions on the number of shareholders. This type of structure is credit-protected; shareholders are only liable to the extent of their capital investment.
Creating a Delaware S-Corporation
Only Delaware residents are permitted to register a S-corporation at this location. The deadline for submitting a special completed form to the tax office is in mid-March.
The desired option is determined by the specific needs of the business. Whatever type of business you open in Delaware, you will be offered preferential tax rates when compared to other states.
Conducting business as a corporation entails adhering to certain rules, such as the annual meeting of shareholders, the preparation of minutes following decisions made, and so on. A meeting can be held in Delaware or any other state.
The fundamental requirements for forming a corporation in the state of Delaware:
- There are no minimum capital requirements.
- One shareholder in the company is sufficient.
- The requirement for a local registered agent.
- There is only one director in the company.
- There are no requirements for the director's residency.
- Once a year, the financial report is due.
- The shareholder meeting can be held online.
- The presence of a registered local office is required.
The state has not established age requirements or residency requirements for founders/managers. In addition, the names and addresses of the meeting's founders/managers are not required to be included in the minutes.
The stages of forming a company in Delaware
- Choosing a Company Name - Choosing the right name for a business or product can be difficult. The most important thing is to remember to include the Inc identifier. or LLC and see if the name you want is already in use by another company.
- Appointment of a manager or director (depending on the type of business) - No residency is required to open a business remotely in Delaware. The procedure can be performed remotely while remaining a non-resident of the state.
- Online submission of documents for the registration of a Delaware corporation. The local registry issues the creation/registration certificate.
- Obtaining Appropriate Licenses/Permits - Certain types of businesses necessitate the acquisition of licenses and permits. You may need licenses from both the municipal and state or national governments to be legal.
- Obtaining an EIN number and opening a Delaware company account are regulatory obligations and registrations.
- Additional conditions - Depending on the structure of your business, opening a Delaware corporation may be accompanied by the following requirements: signing contracts with suppliers and licensing activities.
Documents required to establish a business in Delaware
Individuals and legal entities will need to provide various documents in order to establish a company in the state of Delaware.
- identity verification;
- evidence of residency.
Legal entity documents:
- confirming the incorporation of a legal entity;
- confirming the founders' identities.
You must include the following information on the Delaware company registration form:
- Name of the company.
- Share count and par value.
- The founder's name and postal address.
- Proof of payment of the Delaware business registration fee.
Fill out an application online to expedite the process of submitting documents; verification will take 1-3 days, whereas verification of documents sent by mail can take 1-3 weeks.
- If a Delaware corporation is inherited by a non-resident of the state and the corporation does not operate in the state, the heir does not have to pay the corresponding tax. Residents would be subject to a tax of up to 16%.
- There is no tax on the sale of certain types of goods or services if the company is registered in the state but does not conduct commercial activities within its borders. The corporate tax in this state is 8.7 percent, while the federal tax is 21%.
Because domestic law allows a non-resident to open a company in Delaware, the state of Delaware has grown in popularity among businessmen looking to register a company in America. The state legal framework offers many advantages when registering both LLCs and corporations that do not operate in the country: they are not subject to income tax, there are no requirements for depositing a minimum authorized capital, there are conditions for business development, and privacy protection is present.
Questions and Answers
The bare minimum of documents is as follows:
- information about the directors and shareholders;
- information about the registered agent;
- a description of the planned business activity;
- the Memorandum and Articles of Association;
- confirmation of the presence of a legal address;
- confirmation of the minimum authorized capital contribution.