US – Delaware: LLC

Why is it beneficial for a company to incorporate in Delaware?

Delaware has become a very popular location for incorporation, this is due it being recognized as the state with the most business-friendly law and tax regulations for anyone looking to start or manage a business. Delaware’s tax treatment is especially attractive for business that have other states as their headquarters, as a matter of fact; 34 of the largest 50 businesses in the U.S. along with more than 50% of Fortune 500 ® companies incorporated in Delaware, legal home to more than 1 million business entities.

We have only begun to describe the advantages of incorporating in Delaware and will now list a few more. Not only does Delaware have the most flexible and advanced entity laws- but it is also recognized as having the lowest franchise tax, especially for smaller businesses. Any shareholders, managers and directors are not legally required to be in Delaware, non-residents of Delaware are also not expected to pay personal income tax, sales taxes tax does however not exist. Large corporations with thousands of shareholders can also benefit from incorporating in Delaware as the Court of Chancery uses judges instead of juries, this can save a business a lot of time in the long term.

What type of companies can be formed in Delaware?

A Limited Liability Company more commonly referred to as an LLC is thought of as the easiest business to set up, here are some advantages of forming an LLC:

• Limited liability: This means that members of the company are only liable to the equivalent of what they have invested in the company, personal assets such as bank accounts and real estate are protected- criminal behaviour does however make a person or business vulnerable to legal actions.
• Pass-through Taxation: This means that personal income, for taxation purposes can be viewed as person income, separating it from different federal taxes that businesses are liable for.
• Limitless Ownership: Compared to other legal structures, an LLC does not have a limit on how many people “own” the business and can range from 1 person to several hundred.
• Allocation Flexibility: The amount of money invested does not need to match the percentage of the owner’s investment, this means that different percentages of company profits and losses can be individually assigned to each shareholder, regardless of the amount of money invested.
• Management Freedom: To save you a lot of stress, an LLC does not require a board of directors, nor regular meetings or any strict requirements compared to other business structures.