You’ve probably heard a lot about Delaware from business owners or entrepreneurs who have companies in the state.
The main reason so many entrepreneurs seek to open their LLCs in Delaware is the benefits it offers in terms of tax obligations and legal protection for their businesses.
At the same time, Delaware also offers great convenience when it comes to forming and operating your business.
Let’s take a closer look at the advantages of forming an LLC in Delaware.
Advantages of Forming an LLC in Delaware
1. Asset Protection Against Creditors
Business owners are much more protected when they open an LLC in the United States because there is a protection of personal assets.
This means that when you open an LLC in Delaware, there is a separation of assets, and the company will only respond to creditors with its own assets. Owners will never be personally liable.
2. Receive Payments in U.S. Dollars from Abroad
If you are an entrepreneur living outside the United States, don’t worry. By creating your company in Delaware, you can conduct your business directly in U.S. dollars to access more and higher-quality suppliers.
Delaware provides a corporate safety net that allows you to receive your earnings in U.S. currency without the need to come to the United States.
3. Low Taxes and Simple Maintenance
You can be confident that maintaining an LLC in Delaware will not be very costly or complicated. Each year, you must file an annual Franchise Tax report and fee of $300 with the Delaware Secretary of State. You also need to file an annual Registered Agent fee because all LLCs formed in Delaware are required to have a Registered Agent to accept Service of Process.
4. Delaware LLC Taxes for Non-U.S. Resident Entrepreneurs
Entrepreneurs who do not reside in the United States and have a Delaware LLC only need to pay taxes on income generated within the country. This means that income generated outside the United States may be exempt from taxation, although a tax return must still be filed.
- The process of creating a company in Delaware is quick and cost-effective.
- Company officers can sell their shares at any price they choose.
- A single person can hold all corporate positions.
- Delaware does not require the disclosure of ownership information, ensuring your privacy is protected.
Now that you are aware of all the benefits of creating an LLC in Delaware, let’s see how you can do it.
How to Create Your LLC in Delaware
Remember that Rex Legal provides guidance and assistance in all your processes for creating a company in the United States.
1. Have a Registered Agent
A registered agent is essential when registering your LLC in Delaware. More than a necessity, it’s a legal requirement to have a registered agent to represent your company in receiving government correspondence and legal documents.
A registered agent can be an individual or a company, as long as they have an address in the state where the company was registered.
2. Certificate of Formation
A Certificate of Formation is a document that lists various articles specifying the company’s characteristics, such as:
- LLC Name (Required)
- Registered Agent (Required)
- Members (Optional)
- Purpose (Optional)
- Effective Date (Optional)
This certificate must be signed by one of the company members or the organizer. When it comes to anonymity, Delaware does not publicly share this document, unlike other states.
And when it comes to anonymity, Delaware does not publicly disclose this document, unlike some other states.
3. Submit to the Delaware Division of Corporations
After you’ve prepared the Certificate of Formation, you need to submit it to the state for processing. You can’t register an LLC online; you can only fill out the form on their website and then send it by mail using the following steps:
- Once you have filled out the Certificate of Formation and signed it, make two copies of the document.
- Send the documents to the following address: Delaware Division of Corporations, 401 Federal St. Suite 4, Dover, DE 19901.
What taxes are paid within an LLC in Delaware?
Practically, an LLC does not pay taxes, as in Delaware, you are exempt from the sales tax (both at the state and local levels).
You should be aware that when we talk about being exempt from sales tax, it refers only to sales within Delaware or any other state that is exempt from this tax.
But if your company sells in other U.S. states where sales tax is payable, you’ll have to pay tax only on sales in those states.
Are you ready to open your LLC in Delaware?
If you feel overwhelmed with information, find it difficult to go through the processes on your own, or simply want to delegate it, remember that we are here to assist you.
We are Rex Legal, and our goal is to advise you, guide you, and take the burden off you from having to do the entire process alone.
So if you want to open your LLC in Delaware and need assistance, then contact us.