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Benefits to setting up a limited company (LLC) in Delaware with Coddan Ltd companies formation expert: anybody that has started one of the more than one million companies registered in the Delaware with the Secretary of State will know there's a pile of paperwork to tackle and it can be fraught with costly problems that distract you from actually launching your business. It's cheaper to register a limited company yourself, but this small short-term saving could easily become an expensive nightmare.
When your limited company is registered there are other things to decide: from banking account arrangements to EIN registration. Coddan also provides ongoing care: you can call our team of experts to ask us for help with any relevant paperwork and other filing responsibilities, which have the potential to cost you a lot more if you end up on the wrong side of Secretary of State and IRS. If you have any questions about registering your business as a limited company, and are worried about tackling it all yourself, then Coddan expert in USA is here to help and our team of experts can help you build a better business from the very start.
However, Delaware incorporation can be complicated and stressful. Thankfully, the USA companies formation experts, who can carry out the company registration for overseas customers. They will get your new company in Delaware started whilst complying with all regulations & requirements, and they will usually provide a range of additional services in order to get your new commercial business project off to the best possible start. As well as lodging all the necessary information and documentation to the Secretary of State, new companies registration for customers will often also include the setting up of a bank account - meaning your new LLC company can start trading within hours. Experts will ensure all documentation is completed and submitted according to regulations, and they will also offer other services designed to get your new company setting up efficiently.
The major reason why individuals choose to incorporate their business is to protect their personal assets, such as a home, car or family savings. In the event of a lawsuit or if your business should fail, your personal assets can not generally be touched. This limited liability feature of corporations is not available in a sole proprietorship or partnership, where the individual or partners are personally liable for all business debts.
The costs to incorporate in Delaware are some of the cheapest in the country. Currently, only eight states have cheaper incorporation fees than Delaware and even that is a rather recent development. In attempts to attract more business filings, many states have made their filing fees more competitive with Delaware. Even still, Delaware remains one of the cheapest states in the country to incorporate a business in.
When incorporating a business in Delaware, you don't have to worry about any residency requirement, as it's not required for you to be a Delaware resident. This applies to shareholders, officers, and directors. If your business doesn't conduct business in Delaware, you're not obligated to pay Delaware corporate taxes. However, it will be required to pay a franchise tax each year.
This is actually a big benefit because many states require that you name separate people as officers and directors. If your business is relatively small and you're the only person who runs it, this is a big advantage. This was one of the big draws for Coddan to form an LLC in Delaware. Delaware has a separate court system for corporate law that doesn't involve juries. The advantage of this is that companies don't have to worry about juries deciding corporate cases. Instead, a judge who is familiar with corporate law overseas the case.
The same corporation may conduct different kinds of businesses. If the corporate documents filed with Delaware have the broadest type "purpose clause", any legal business activity of any kind may be conducted. More than one type of business can be conducted by the same corporation without any changes in the documents filed with the state. Delaware corporations have a special "Director Shield" that permits corporations to shelter their directors from personal liability in connection with their actions as board members.
Delaware statutes also help limit hostile or abusive takeover tactics. The corporate headquarters and the records of a Delaware corporation may be located in any state in America or in any country in the world as long as the corporation maintains a registered expert to represent you in Delaware. Most of the owners of Delaware corporations have never set foot in Delaware. A Delaware corporation does do not need to maintain a Delaware business address except for its registered expert address which is required by law for service of process in case of legal action against your company.
We recognize that registering a partnership, or forming a limited liability company (LLC) can be a maze of paperwork and documentation. Let us help you in compiling and organising all the necessary documentation, and even assist you in deciding which business form would work best for you. The form of business entity selected for the conduct of a business greatly impacts the daily operations of the business and the income tax consequences to both the business and its owners. Our services extend from the initial document preparation and filing with appropriate authorities, including post-formation activities such as preparation and adoption of By-laws and director/shareholder resolutions.
Our lawyers have vast experience in dealing with many types of business entities, from start-up ventures to large corporations. Our lawyers assist start-up businesses in the choice of entity, whether a corporation, limited liability company, general partnership, limited partnership, or limited liability partnership. Each of these entity choices offers its own unique set of advantages and disadvantages. The key to setting up a successful business is properly defining the relationship among the owners. Our lawyers have experience in setting up these agreements, whether employment agreements, shareholder agreements, partnership agreements, or operating agreements.
We deliver a fast and reliable service as well as the lowest fees provided in Delaware, with no hidden charges. Incorporating is one of the best ways a business owner can protect his or her personal assets. Most people choose to incorporate solely for this reason, but there are other advantages as well. For example, the corporate business structure allows you to save money in taxes, provides greater business flexibility and lets you more easily raise capital:
The following is a detailed description of the entire incorporation process: complete our online questionnaire. We will prepare your articles of incorporation or articles of formation, review it for completeness and file it with the Secretary of State. In some states, we may not be able to sign the articles of incorporation on your behalf and will need to deliver it to you for signature.
Once your materials are submitted, the processing time required would vary depending on the state in which you file. We will then prepare your by-laws (or an operating agreement for an LLC) and organizational minutes. Your corporation will become active when the certificate of incorporation has been accepted for filing with the Secretary of State. Once we receive the filed certificate of incorporation, we will deliver it to you, along with your complete corporations package. The directors of the corporation will need to sign the organizational minutes.
Please note: If you incorporate in one state and end up conducting most of your business in a different state, you will have to qualify to do business in that other state, which will involve more fees and costs, more filing requirements, and more paperwork. A corporation doing business in a state other than its state of incorporation is considered a foreign corporation.
One single individual may simultaneously hold all of the executive offices and titles of a corporation, including: chairman of the board, president, vice president, secretary and treasurer. Unlike states that require as many as three different individuals to hold the posts of officers and/or directors, Delaware permits you to be a one-person corporation. A Delaware director shield law permits corporations to shelter their directors, liberally, from personal liability in connection with their actions as board members.
Your corporation may be based, headquartered and/or operated in any state or territory of the United States - or in any city in any country in the world - providing that you retain the services of a Delaware registered expert such as Coddan Ltd. Delaware has a highly specialized and expert corporate bar that is very familiar with Delaware corporate law and which appears regularly before judges of the Court of Chancery.
There is no sales tax in Delaware. Whether your corporation is physically located in Delaware or not, as a corporation, your 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 has no ad-valorem or value-added taxes (VATs). There is no State of Delaware inheritance tax on stock of Delaware corporations operating outside of Delaware held by non-residents of Delaware.
The liability of a shareholder of a Delaware corporation is limited by the amount of his investment in the corporation plus the corporate tax liability - provided that the corporation has conducted its business according to all applicable state and federal laws. Your Delaware corporation may own - without limitations as to amount or value - stocks, bonds or securities of other corporations located in Delaware or outside of Delaware as well as real and personal property.
Some states impose an annual fee or tax on LLCs, in addition to individual income tax that owners pay on the LLC profits allocated to them each year. Because an LLC is taxed as a partnership, it files standard partnership tax returns (IRS Form 1065 and Schedules K) with the IRS and state, and the LLC owners pay taxes on their share of LLC profits on their individual income tax returns. Each owner gets a Schedule K-1 from the LLC, which shows the owner's share of LLC profits and deductions. The owner attaches the K-1 to her individual income tax return.
A sole-owned LLC is treated as a sole proprietorship for tax purposes. The owner includes profits or losses from LLC operations, as well as deductions and credits allowable to the business, on a Schedule C included with the owners' individual income tax returns. (In essence, for a sole LLC owner, the Schedule C works much like the K-1 schedule filed by the owners of a co-owned LLC.)
If a sole-owner or multi-owner LLC elects corporate tax treatment, the LLC is treated and taxed as a corporation, not as a sole proprietorship or partnership. The LLC files corporate income tax returns, reporting and paying corporate income tax on any profits retained in the LLC. The LLC members report and pay individual income tax only on salaries paid to them or distributions of LLC profits or losses.
However, as is true for partnerships, LLCs that may benefit from electing corporate tax treatment normally decide to go ahead and incorporate. By doing so, they get corporate tax treatment plus the other advantages the corporation provides, such as access to capital, capital sharing with employees, tax-deductible employee fringe benefits and built-in management formalities.
LLCs are normally managed by all the owners (also called members) - this is known as "member-management LLC". But state law also allows for management by one or more specially appointed managers, who may be members or non-members. Not surprisingly (but somewhat awkwardly), this arrangement is known as "manager-management LLC".
In other words, an LLC can appoint one or more of its members, or one of its CEOs or even a person contracted from outside the LLC, to manage its affairs. This manager setup is somewhat atypical and normally only makes sense if one person wishes to assume full-time control of the LLC, with the other owners acting as passive investors in the enterprise.
LLC formation requirements: like a corporation, an LLC requires paperwork to get going. You must file Articles of Organization with the state business filing office. And if the LLC is to maintain a business presence in another state, such as a branch office, you must also file registration or qualification papers with the other state’s business filing office.
LLC formation fees vary, but most are comparable to the fee each state charges for incorporation. Like a partnership, an LLC should prepare an operating agreement to spell out how the LLC will be owned, how profits and losses will be divided, how departing or deceased members will be bought out, and other essential ownership details. If you don't prepare an operating agreement, the default provisions of the state’s LLC Act will apply to the operation of your LLC.
Since LLC owners will want to control exactly how profits and losses are apportioned among the members as well as other essential LLC operating rules, the preparation of an LLC operating agreement is a necessity.
Let Coddan help you with your LLC formation and any other legal procedures you may need. We make the process of incorporating as simple as possible so that you can take care of more important matters. Have more questions? Ready to get started? Please call: 0207 935 5171 or 0330 808 0089 so that we may help you. Referrals and repeat customers generate most of our business. We are more than just a filing service; we develop relationships with clients to help make them successful and keep them returning.
The reason is not just one but several. They include the Delaware General Corporation Law that is one of the most advanced and flexible corporation statutes in the nation.
Secondly, Delaware courts and, in particular, the Court of Chancery, have over 200 years of legal precedent as a maker of corporation law. Thirdly, the state legislature seriously takes its role in keeping the corporation statute and other business laws current. Lastly, the office of the Secretary of State operates much like a business rather than a government bureaucracy with its modern imaging system and customer service oriented staff.
State of Delaware advantages & advantages of Delaware Corporation Law: there is no state corporate income tax in Delaware on goods or services provided by corporations (or limited liability companies) operating outside of Delaware. There is no sales tax in Delaware. Whether your corporation (or limited liability company) is physically located in Delaware or not, as a Delaware corporation, your purchases in Delaware are not subject to sales tax. There is no state corporate tax on interest or other investment income in Delaware, when earned by a Delaware holding company.
Delaware has no personal property tax. There are no State real property taxes, and the local real property taxes are very low. Delaware has no value-added taxes (VAT). Delaware has no taxes on business transactions (TBTs), which are essentially VATs that exempt retailers. Delaware has no use tax, inventory or unitary tax.
There is no State of Delaware inheritance tax on stock of Delaware corporations operating outside of Delaware held by non-residents of Delaware. There is no Delaware capital shares or stock transfer taxes.
Broad corporate powers permit conduct of several legal businesses by one corporation. One person can be the only officer, director, and shareholder. Officers and directors can be indemnified, limiting their personal liability. Corporate books and records may be kept anywhere in the world.
No minimum amount of capital is required. Non-resident shareholders pay no Delaware tax on shares. Shareholders are protected by takeover statue, which limits abusive hostile takeover tactics. Directors need not be shareholders. Service from the State of Delaware is fast and efficient.
Incorporation costs are low. Most Delaware corporations can be formed within minutes and documents are available within 24 to 48 hours.
Delaware corporation law has well-established legal precedent. Delaware courts are respected nationwide for their expertise in corporate matters. Voting provisions requiring greater-than-majority approval may be enacted. Liberal choice of corporate name provisions and ease of reserving corporate name.
Corporation may pay dividends from profits and surplus. Shareholders, directors and/or committee members may act by unanimous written consent in place of formal meetings. Directors may be given the power to make and alter Bylaws. The director(s) of a Delaware corporation are permitted to set the sales price on any stock the corporation issues and plans to sell.
The director(s) of a Delaware corporation may determine what percentage of the consideration received from the issue of their stock is to be considered capital. This is important because it gives the directors greater flexibility regarding the use of funds obtained in a public offering, so that large amounts are not tied up in the capital account.
Corporation may own - without limitations as to amount or value - stocks, bonds or securities of other corporations located in Delaware or outside of Delaware as well as real estate personal property. This means that your corporation can be set up as, or later become, a holding company. Different kinds of business may be carried on in combination.
Corporation may fix quorum of board of directors - not less than one-third of the whole board; two if only two shareholders; one if only one shareholder. Voting trusts and voting agreements may be created. Delaware law includes close corporation provisions. Personal financial liability of owners no greater than the shareholders' or members' investment; owners are insured from personal liability for negligent acts of the entities and its debts.
Separate legal identity - a corporation or LLC has a distinct identification completely apart from its owners, directors and officers.
Ease of transferability of ownership - shares of stock in a corporation or interest in an LLC may be sold or distributed without impairing organization or operation. Uninterrupted legal existence - both corporations and LLC's have a perpetual life even upon death of primary owners or officers.
A Delaware corporation which is properly formed and operated as a corporation assumes a separate legal and tax life distinct from its shareholders. A corporation pays taxes at its own corporate income tax rates and files its own corporate tax forms each year (IRS Form 1120). As a separate entity, it can buy real estate, enter into contracts, sue and be sued completely separate from its owners.
Also, money can be raised easier via the sale of stock; its ownership can be transferred via the transfer of stock; the duration of the corporation is perpetual (the business can continue regardless of ownership); and the tax advantages can be considerable (i.e. you are able to deduct many business expenses, healthcare programs, etc.). Income is reported completely separate via a tax return for the corporation.
Normally, a corporation's management and control is vested in the board of directors who are elected by the shareholders of the corporation. Directors generally make policy and major decisions regarding the corporation but do not individually represent the corporation in dealing with third persons. Rather, dealings with third persons are conducted through officers and employees of the corporation to whom authority is delegated by the directors of the corporation.
To retain the corporate existence and thus the benefits of limited liability and special tax treatment, those who run the corporation must observe corporate formalities. Thus, even a one-person corporation must wear different hats depending on the occasion. For example, one person may be responsible for being the sole shareholder, director, and officer of the corporation; however, depending on the action taken, that person must observe certain formalities: annual meetings must be held, corporate minutes of the meetings must be taken, officers must be appointed, and shares must be issued to shareholders. Most importantly, however, the corporation should issue stock to its shareholders and keep adequate capitalization on hand to cover any "foreseeable" business debts.
The corporation is the most enduring form of business entity. Originally created hundreds of years ago as a way to protect the shareholders in risky overseas ventures, corporations today are now formed by filing the necessary documents and fees with the Secretary of State. This creates a separate legal entity that is separate from the shareholders. It's akin to creating a new "person" with its own name and social security number (called the EIN or Tax ID Number: we can prepare this for you). The rules for operating your corporation are set in what are called corporate Bylaws. This document sets the rules for operating the company and can be modified as the business grows and changes.
Many business owners delay incorporating or registering a limited liability company (LLC) because they are apprehensive about the documentation required to keep their company in compliance. Incorporating or forming an LLC helps protect personal assets and provides tax-deductible benefits for employees and owners.
It's unwise to forgo these benefits simply due to a healthy fear of paperwork. While state-by-state requirements vary, here are three important tips to help you keep your company in compliance and protect your personal assets in the event of legal action against your company: avoid co-mingling your personal funds and identity with that of your company. Document your corporate/LLC activities.
Be on time when paying your state franchise taxes and submitting your company's annual report. Keeping your personal identity separate from your company includes signing business documents not only with your name but also with your business title and the name of your company.
Other tips: avoid using personal checks or funds for business expenses and visa versa; avoid using personal stationary for business communications and company letterhead for personal matters. Equally important is documentation of company activities. This includes keeping company records such as articles of incorporation, annual meeting minutes, sales of company shares, bylaws and business contracts in an organized format like a corporate binder or kit. As changes occur in your company structure, it is important to also keep amendments in your company files.
Finally, to protect your corporate status, you must remember to pay your annual state franchise taxes and file your annual report with the state. Failure to do so will result in the state voiding your company and treating it as an inactive entity. Fear not, resources are available to help your company stay in compliance. Apply for your Federal Tax ID and take care of any special IRS elections such as S Corporation status.
Write your company bylaws and any operating agreements you may need. Open your company bank account. If a corporation, then hold your first corporate annual meeting with written meeting minutes. If you formed a corporation, file an annual report with your state. Select an accountant/tax preparer and an attorney for your company. Coddan can assist you in forming or qualifying your company in any state you choose and can assist you in keeping track of your state qualifications.
In addition to filing corporations and limited liability companies in all 50 states and the District of Columbia, Coddan offers a wide range of products and services to help businesses preserve and protect their corporate status. We provide resident expert services, and mail forwarding services, corporate kits, Certificates of Good Standing, Apostille legalisation and qualifications to do business in any state. Our commitment to the success of small businesses does not end there.