DELAWARE COMPANY FORMATION

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More than 900,000 business entities are operating in the state of Delaware. While the number of companies registered in Delaware is very important, the more noteworthy still is the fact that so many large well-known organisations are incorporated in Delaware, as more than one-half of the corporations which are listed in the Fortune 500 are Delaware companies. It is no wonder that Delaware has become so popular.

There are a number of reasons why Delaware company formation has become so prestigious. Delaware has a modern Companies Law and a well-developed case law that simplifies in business planning.

 

 

KEY BENEFITS

  • The names of the shareholders are not disclosed;
  • Annual state franchise tax is low;
  • An individual can hold all corporate offices and be the sole director;
  • There is no minimum capital in order to start business;
  • Meetings are held anywhere in the world;
  • No residency requirements for shareholder and directors;
  • Corporations can be established for any lawful act or activity;
  • Whether your corporation is actually located in Delaware or not, the purchases in Delaware are not subject to sales tax. There is no state corporate income tax in Delaware on goods or services provided by Delaware corporations operating outside of Delaware. There is no state corporate tax on interest or other investment income in Delaware, when earned by a Delaware holding company.
 

DELAWARE COMPANY TAXES

 

Delaware boasts of having very efficient tax system that excludes sales taxes and or intangible personal property tax. What’s more beneficial is that there is no income tax and business does not require to be licensed if the corporations do not transact any business in Delaware.

The US Federal income tax system exempts US Limited Liability Companies that are structured for partnership tax treatment. These are companies that have non-resident members and do not conduct any business in US. Further, these companies do not have any US- source income.

The state income tax exempts US limited liability companies that do not conduct any business in the recommended states of formation. These companies also need to ensure that their membership is constituted of non –resident members (shareholders). As such, these companies are not eligible for filing for state income tax return.

The Delaware Corporation minimum yearly franchise tax stands at $75 and $50 filing fee. Additionally, the Delaware LLC annual fee stands at $250.

 

DELAWARE COMPANY CORPORATE AND LEGAL FEATURES

DIRECTOR

A person whether a US citizen or a foreigner is legally allowed to be the President, Secretary, Treasurer & the Sole Director of a Delaware corporation. In addition to this, the person needs not disclose the name or names of holders of the positions in the Certificate of Incorporation. It is important to note that the Director (s) is bestowed with capacity to amend or change the corporation’s bylaws. Such person (either a US citizen or foreigner) may be a member and also participate in the management of an LLC.

REGISTERED ADDRESS

It is not required to have a business address and or office in Delaware. The business address is required to be at the specific location where the corporation conducts its business.

SHARE CAPITAL

There is no minimum capital requirement required for the incorporation of a Corporation or in the formation of an LLC.
A Registered Agent receives an annual fee paid by the corporation so as the agent can serve as the corporation’s statutory Registered Agent. Oxford can provide this facility and as such will be tasked with receiving and forwarding copies of legal actions and complains filed against the corporation. Annual meetings are free to be held in Delaware or any other place thereof.

In addition to this; minutes of a meeting can be signed through consent without the need of having a meeting to confirm the minutes. Upon your request, we can also undertake mail forwarding referral services as well as bank account referrals.

NAME RESTRICTIONS

The naming of the corporation requires being unique such that it should not be identical to that of an already existing company with the formation state. Further, the use of trust, bank, insurance or reinsurance within the LLC’s name is prohibited not only in Delaware but also in all 50 states. This is due to the reason that the law does not allow limited liability companies to deal in banking and or insurance businesses.

FINANCIAL STATEMENTS

Generally, there is no requirement that provides for filing of financial statements with the formation state unless in cases where the corporation conducts business or owns assets in the state.

CONFIDENTIALITY

Delaware permits the anonymity of LLC owners and managers. The identity of the owners and managers should however be revealed to law enforcement authorities.

 

For more information regarding Delaware Companies please download our Factsheet #27 – Delaware Companies.