Delaware
Limited Liability Company
Corporation

Benefits of Delaware Limited Liability Company

  • https://buynowcompanies.com/wp-content/uploads/2020/01/3-directors-1-shareholder-required-no-locals.svg

    1 Director, 1 Shareholder Required, No Locals

  • https://buynowcompanies.com/wp-content/uploads/2020/01/incorporation-in-10-13-days.svg

    Incorporation in 5-7 days

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    Legal System Based on Common Law

  • https://buynowcompanies.com/wp-content/uploads/2020/01/no-filing-of-financial-records-no-auditing.svg

    No Filing of Financial Records, No Auditing

  • https://buynowcompanies.com/wp-content/uploads/2020/01/no-local-tax-for-income-outside-Panama.svg

    No Local Tax for Income outside Delaware

  • https://buynowcompanies.com/wp-content/uploads/2020/01/no-public-record-for-shareholders.svg

    No Public Record for Directors and Shareholders

  • https://buynowcompanies.com/wp-content/uploads/2020/01/reputable-financial-forum.svg

    Reputable Financial Forum

Delaware LLC activities

Under the Delaware General Corporation Law, the LLC Company is an independent legal personality, its owners and managers have no personal liability for its debts and obligations. The operations and management of the LLC Company are determined by an agreement between its owners, called the Operating Agreement, which cannot be accessed by the public as it is not filed to the Delaware Division of Corporations.

Once the LLC Company is formed, if it is not chosen otherwise, it does not have to pay income tax on the corporate level, instead the income tax can be allocated to the owners and therefore be imposed on a personal level, as if it was a sole proprietorship whereas there is only one member or a partnership whereas there are more than one member. Therefore, the members who are not U.S. tax residents are not subject to U.S. federal tax.

Delaware LLC is optimal for:

  1. Ownership of Vessels
  2. Technology and Web Business
  3. International Business
  4. Inheritance Planning
  5. Asset and Wealth Protection

Benefits of Delaware Corporation

  • https://buynowcompanies.com/wp-content/uploads/2020/01/3-directors-1-shareholder-required-no-locals.svg

    1 Director, 1 Shareholder Required, No Locals

  • https://buynowcompanies.com/wp-content/uploads/2020/01/incorporation-in-10-13-days.svg

    Incorporation in 5-7 days

  • https://buynowcompanies.com/wp-content/uploads/2020/01/legal-system-based-on-Civil-Law.svg

    Legal System Based on Common Law

  • https://buynowcompanies.com/wp-content/uploads/2020/01/no-filing-of-financial-records-no-auditing.svg

    No Filing of Financial Records, No Auditing

  • https://buynowcompanies.com/wp-content/uploads/2020/01/no-local-tax-for-income-outside-Panama.svg

    No Local Tax for Income outside Delaware

  • https://buynowcompanies.com/wp-content/uploads/2020/01/no-public-record-for-shareholders.svg

    No Public Record for Directors and Shareholders

  • https://buynowcompanies.com/wp-content/uploads/2020/01/reputable-financial-forum.svg

    Reputable Financial Forum

Delaware Corporation activities

Under the Delaware General Corporation Law, a corporation is an independent legal entity, its owners and managers have no personal liability for its debts and obligations. Once a corporation is formed, the choice may be made, to not be subject to corporate income tax on the corporate level, instead the income tax can be allocated to the shareholders and therefore be imposed on a personal level, as if it was a sole proprietorship whereas there is only one member or a partnership whereas there are more than one member. Therefore, the members who are not U.S. citizens or tax residents are not subject to U.S. federal tax.

Delaware Corporation is optimal for:

  1. Ownership of Vessels
  2. Technology and Web Business
  3. International Business
  4. Inheritance Planning
  5. Asset and wealth Protection

Delaware LLC incorporation checklist

If you are considering the incorporation of a Delaware LLC, you should take into consideration the following points:

Company’s name

The following words are expressly prohibited: “Bank”, “Trust”, “University”, “College” or any other word implying association with any licensed professionals or individuals, unless you have a license. There is also a prohibition for words implying an affiliation with a federal or state or organisation and words which are suggesting an illegal purpose.

The company’s name must not be very similar to names of existing companies causing confusion and it must not contain improper or offensive words. The company’s name must end with the abbreviation “LLC” that stands for Limited Liability Company. The name of the LLC can have foreign words, but they must be accompanied with an accurate translation in English.

It should be noted that the Secretary of State has the power to object the registration of any name that in their discretion is considered undesirable.

Registered office

An LLC Company is required to have a registered office address in Delaware which must be provided by an authorized registered agent within the state.

Directors/managers

The requirement to have a director/manager depends on what is determined by the LLC Operating Agreement, which is drafted by the company’s owners. When an LLC Company has only one member there is no requirement to appoint a director/manager. The director (manager) and shareholder (members) can be the same person as a managing-member.

Regarding the managers, the legislation imposes no requirement for them to be locals and there is no requirement regarding the place and frequency of board meetings. Corporate persons can become managers. The directors (managers) details are not registered on the public record and cannot be accessed by the public. Under the law, the LLC’s Operating Agreement is not disclosed to the Secretary of State, this provision safeguards all the parties’ privacy, directors and shareholders alike.

Shareholders/members

The only document that is mandatory to be filed for the registration of the LLC Company is the Certificate of Formation which must contain the following information: the Company name, the address of the registered office and the name and address of its registered agent. The names of the LLC Company shareholders (members) are not required to be stated in the Certificate of Formation which is prepared, executed and filed to the Delaware Division of Corporations by an Authorised person or organisation who is usually the Company’s registered agent. Upon filing the document, the Authorised person will deliver it to the initial members by signing the Statement of Authorised Person which is not filed to the state record.

The members are the equivalent of a shareholder in the LLC Company. One member is the minimum required, there is no requirement for them to be locals and corporate entities can be appointed as members. There is no requirement regarding the place and frequency of member meetings. The director (manager) and the member can be the same person.

Beneficial owners

The beneficial owners’ details are not registered on any public record and cannot be accessed by the public.

Authorised share/stock capital

For this type of company, shares are referred to as units and they determine the voting rights of the owners. They can be categorised into classes by the Operating Agreement, each class having different rights and privileges. Only registered shares are admissible, a Delaware LLC Company may not issue bearer shares.

Paid up capital

No requirement is imposed on minimum paid up capital at incorporation; this means that the owners of an LLC Company are not required to set a deadline as to when such capital must be paid up by the shareholders.

Incorporation period

An LLC Company in Delaware can be incorporated within 5-7 days, Delaware is considered to have a very efficient company registrar, which is the Secretary State’s Division of Incorporations. The option for incorporation in lesser time is offered but the government fee is higher.

Shelf companies

Ready-made but unused LLC Companies are available in Delaware, in case you are in need of a quicker incorporation process.

Economic substance

There are no substance requirements, on the contrary, a corporation will qualify for an exemption from Federal and State taxes if its operations and profit generating activity are not conducted from within the US and it does not rent premises or own real estate in the US and its income is not effectively connected with the US.

Accounting records and annual returns

The Delaware LLC Company is not required to file to the public record accounting records nor is it required to do auditing. Also, there is no requirement to file annual tax returns, at Federal or State level. However, it is mandatory that the LLC Company prepares and keeps at its registered office or agent the financial accounts of the company. The amount of USD 300 is payable annually on the 1st of June as franchise tax.

Taxation

There is an exemption in the jurisdiction of Delaware for non-resident members from any federal taxation and the obligation to file US income tax return, provided that the LLC Company does not conduct any transactions within the United States. In general, the following sources of business income are not taxed in the United States: salaries, wages and other compensation for services provided outside the US, sale of inventory produced or purchased outside the US, dividends paid to non-residents, royalties for tangible assets located outside US and intangible assets used outside US and sale of real estate outside the US. It is required though to file a Report of Foreign Bank and Financial Accounts if the company’s bank account balance at any time throughout the year is over 10,000 USD.

Disclaimer: Buy Now Companies and its affiliates do not provide tax, legal, or accounting advice. Materials provided by Buy Now Companies and [insert domain name] have been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal, or accounting advice. You should consult your own tax, legal, or accounting advisor with regard to your own tax, legal, or accounting scenario. Nothing on this webpage shall be construed as a contractual commitment or as a warranty. Services conditions are governed by the applicable terms and conditions.

Delaware Corporation incorporation checklist

If you are considering the incorporation of a Delaware Corporation, you should take into consideration the following points:

Company name

The following words are expressly prohibited: “Bank”, “Trust”, “University”, “College” or any other word implying association with any licensed professionals or individuals, unless you have a license. There is also a prohibition for words implying an affiliation with a federal or state or organisation and words which are suggesting a purpose that is illegal.

The company name must not be very similar to names of existing companies causing confusion and it must not contain improper or offensive words. The company name must end with the abbreviation “LLC” that stands for Limited Liability Company. The name of the LLC Company can have foreign words, but they must be accompanied by an accurate translation in English.

It should be noted that the Secretary of State has the power to object the registration of any name that in their discretion is considered undesirable.

Registered office

Every corporation is required to have a registered office address in Delaware for where any legal documents may be served. Corporations that do not have a physical address in Delaware, are required to have a registered office address in Delaware, which is provided by an authorised registered agent within the state.

Directors/managers

Regarding the directors, the legislation imposes no requirement for them to be locals and there is no requirement regarding the place and frequency of board meetings. The director and shareholder can be the same person. Corporate entities cannot become directors. The directors’ details are not registered on the public record and cannot be accessed by the public.

Shareholders/ Members

One shareholder is the minimum required, there is no requirement for them to be locals and corporate entities can be appointed as shareholders. The shareholder and the director can be the same person. It is mandatory that the corporations hold an Annual General Meeting, but there is no requirement regarding the place of meetings which can be held through electronic communication.

Beneficial owners

The beneficial owners’ details are not registered on any public record and cannot be accessed by the public.

Authorized share/stock capital

The owners of a corporation must determine the amount of authorised capital at incorporation and it can be de-nominated in any currency, though the US Dollar is mostly preferred and the amount of USD 50,000 is suggested. The authorised capital is the maximum amount of capital that the corporation is authorised by its constitutional documents to draw from its shareholders in exchange of shares issued, or stocks as they are referred in Delaware.

A corporation must have only registered stocks and the par value of those stocks must be stated at incorporation, however, a corporation may have stocks without par value.  Additionally, it must be stated at incorporation whether the corporation will have other classes of stocks.

Paid up capital

No requirement is imposed on minimum paid up capital at incorporation; this means that the owners of a corporation are not required to set a deadline as to when such capital must be paid up by the stockholders.

Incorporation period

A corporation in Delaware can be incorporated within 5-7 days. Delaware is considered to have a very efficient company registrar, which is the Secretary State’s Division of Incorporations. The option for incorporation in less time is offered, but the government fee is higher.

Shelf companies

Ready-made but unused corporations are available in Delaware, in case you are in need of a quicker incorporation process.

Economic substance

There are no substance requirements, on the contrary, a Delaware corporation’s profits and losses will qualify for an exemption from Federal and State taxes if its operations and income generating activity is not conducted from within the US and it does not rent premises or own real estate in the US and its income is not effectively connected with the US.

Accounting records and annual returns

The Delaware corporation is not required to file to the public record accounting records nor is required to do auditing. However, there is a requirement to keep records for the day-to-day running of its business, containing inter alias the stock ledger, accounting books and minutes of meetings. The records may be kept anywhere in the world.

Also, the corporations must file franchise tax reports on an annual basis by the 1st of March and annual franchise tax is payable based on the corporations authorised share capital. Also, resident corporations which are not treated as S-corporations for tax purposes and conduct economic activities in the state of Delaware, are required to file Federal Income tax returns.

Taxation

There is the option in the jurisdiction of Delaware for corporations to choose to be taxed as S corporations whose profits or losses are passed to its shareholders, therefore the individual shareholders prorated share in the corporation is included in the respective income tax return of the shareholder and taxed at personal or corporate rates. In this regard there is an exemption from federal taxation on a personal level when an individual is not tax resident in the US, in this regard US citizens and individuals with permanent residence in the US are considered as tax residents in any case.

Whereas the choice to be treated as S-corporation for tax purposes, by default the corporation will be treated as C-corporation for tax purposes for which corporate income tax applies at the rate of 21% on all income whether it comes from source within the US or abroad, also tax is imposed on capital gains, incoming dividends, interests and royalties. Due to the US extended network of Double Taxation Treaties there are certain deductible taxes for income deriving from a foreign source.

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